Reference no: EM132840562
BALANAR Co. has the following information relating to its shareholders equity as of January 1, 2014.
Share capital, 200,000 authorized, P50 par value, 150,000 shares issued, 10,000 held in treasury P7,500,000
Share premium - ordinary 600,000
Retained earnings 2,000,000
Treasury shares, at cost 550,000
The following events transpired in 2014:
- On March 31, 2014, BALANAR reissued 2,000 of its treasury shares for P59 per share.
- On June 1, 2014, BALANAR reissued 2,500 of its treasury shares for P50 each
- On December 1, 2014, BALANAR retired 1,000 ordinary shares for P49 per share.
Problem 1: In connection with March 31, 2014 transaction of BALANAR Co., which of the following statements is correct?
a. Share premium - treasury will be credited by P8,000.
b. Share premium - ordinary account will be credited by P8,000.
c. Share premium - treasury account will increase by P18,000.
d. Retained earnings will be credited by P18,000.
Problem 2: In relation with June 1, 2014 transaction, what is the journal entry of BALANAR Co. to record the transaction?
a. DR -Cash 125,000 DR -Share premium - treasury P8,000 DR- Retained earning P 4,500; CR- Treasury shares P137,500
b. DR - Cash 125,000; CR- Treasury shares P125,000
c. Dr - Cash 125,000 DR- Retained Earnings P12,500; CR- Treasury shares P137,500
d. DR - Treasury shares P137,500; CR- Cash P125,000 CR- Share premium-TS P8,000 CR- Retained Earnings P4,500
Problem 3: What is the total amount of share premium of BALANAR as at December 31, 2014?