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How much will be charged to retained earnings

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Question - Sik Corporation has a convertible preference shares with a 2 for 1 ordinary share conversion basis. Other relevant information at January 31, 2021 is as follows:

Preference Share,P40 par, 50,000 shares issued and outstanding- P2,000,000

Ordinary Share Capital, P50 par, 80,000 shares issued and outstanding- P4,000,000

Share Premium-Preference- P300,000

Share Premium-Ordinary- P600,000

Retained Earnings- P750,000

Assuming a 30,000 preference shares was converted, how much will be charged to Retained Earnings as a result of conversion?

A. P630,000

B. P120,000

C. P0

D. P112,500

Reference no: EM133047452

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