Reference no: EM133110870
Question - At December 31, 2019, DARNA INC. had 3,000,000 authorized shares and P10 par value ordinary shares, of which 1,000,000 shares were issued and outstanding. The shareholders' equity accounts of the company had the following balances at December 31, 2019:
Ordinary shares P10,000,000
Share premium 3,750,000
Retained earnings 3,250,000
Transactions during 2020 and other information relating to the shareholders' equity accounts are as follows:
a. On January 5, 2020, DARNA issued at P54 per share, 50,000 shares of P50 par value, 9% cumulative convertible preference shares. Each preference share is convertible at the option of the holder into two ordinary shares. DARNA had 300,000 authorized preference shares. The preference share has a liquidation value equal to its par value.
b. On February 1, 2020, DARNA reacquired 10,000 of its ordinary shares for P16 per share.
c. On April 30, 2020, DARNA sold 250,000 (previously unissued) of P10 par value ordinary shares at P17 per share.
d. On June 20, 2020, DARNA declared a cash dividend of P1 per ordinary share, payable on July 25, 2020, to shareholders of record on July 4, 2020.
e. On November 8, 2020, DARNA sold 5,000 treasury shares for P21 per share.
f. On December 5, 2020, DARNA declared the yearly cash dividend on preference shares, payable on January 10, 2021, to shareholders of record on December 31, 2020.
g. On January 19, 2021, before the books were closed for 2020, DARNA became aware that the ending inventories at December 31, 2019 were understated by P150,000 (after tax effect on 2019 net income was P105,000). The appropriate correcting entry was recorded the same day.
h. After correcting the beginning inventory, net income for 2020 was P2, 235,000.
Required -
1. What is the retained earnings (unappropriated) balance on January 1, 2020, as restated?
2. What is the retained earnings (unappropriated) balance on December 31, 2020, as restated?
3. What is the total share premium on December 31, 2020?
4. What is the total shareholder's equity on December 31, 2020?
5. Compute the book value per share of ordinary and preference shares at December 31, 2020?