Reference no: EM132873980

Questions -

Q1. At the beginning of current year, Axed Company was authorized to issue share capital of 100,000 shares with P30 par value. Axed had the following share capital transactions during the year:

January 1 Issued 80,000 shares at P70 per share

May 1 Reacquired 4,000 treasury shares at P65 per share

July 1 Approved a share split of 5 for 1

October 31 Issued a 10% share dividend when the market value of a share is P25

December 31 Reissued all of the treasury shares at P35

December 31 Net income for the year was P4,500,000.

Q1) What total amount should be reported as share capital at year-end?

A. 3,200,000

B. 3,428,000

C. 2,940,000

D. 2,628,000

Q2) What total amount should be reported as share premium at year-end?

A. 3,200,000

B. 3,640,000

C. 3,922,000

D. 4,362,000

Q3) What amount of retained earnings should be reported at year-end?

A. 3,550,000

B. 4,500,000

C. 3,430,000

D. 2,950,000

Q4) Gel Company was organized on January 1, 2022 with 100,000 authorized shares of P100 par value.

January 15 Sold 30,000 shares at P150 per share.

February 14 Issued 2,000 shares for legal services with a fair value of P300,000. The shares on this date are quoted at P160 per share.

March 27 Purchased 5,000 treasury shares at a cost of P12 per share.

October 31 Issued P4,000,000 convertible bonds at 110. The bonds are quoted at 97 without the conversion feature.

November 5 Declared a 2-for-1 share split when the market value of the share was P160.

December 17 Sold 10,000 shares at P75 per share.

What total amount should be recognized as share premium on December 31, 2022?

A. 1,830,000

B. 1,850,000

C. 2,390,000

D. 2,370,000

Q5) Bacquirin Company provided the following postclosing trail balance at year-end:

Debit Credit

Accounts payable and accrued liabilities 3,000,000

Accounts receivable 6,000,000

Accumulated depreciation 2,500,000

Allowance for doubtful accounts 800,000

Bonds payable 5,000,000

Property, plant, and equipment 11,000,000

Cash 2,500,000

Ordinary share capita, P50 par value 6,000,000

Dividends payable 200,000

Inventory 8,000,000

Available for sale securities 3,500,000

Investment in equity securities, at cost 2,000,000

Unrealized loss on interest rate swap designated as cash flow hedge 500,000

Share premium - ordinary in excess of par from 5,000,000

Share premium - from sale of treasury 1,000,000

Preference share capital, P25 par value 6,500,000

Treasury ordinary shares - 20,000 at cost 1,500,000

Total 35,000,000 35,000,000

The dividend on cumulative preference share capital is 10%. The preference share has a liquidation value of P50. What amount should be reported as shareholders' equity?

A. 22,000,000

B. 21,500,000

C. 21,700,000

D. 23,500,000

Use the following information for the next three (3) questions:

Toyoya Company has two classes of share capital outstanding consisting of 12%, P100 par value preference share and P50 par value ordinary share. The entity reported the following balances at the beginning of the current year:

Preference share capital - 5,000 shares 500,000

Ordinary share capital - 50,000 shares 2,500,000

Share premium - PS 200,000

Share premium - ordinary 500,000

Retained earnings 2,000,000

The following data summarize the transactions for the current year:

Shares Per share

1. Issued ordinary share capital 20,000 50

2. Purchase of treasury - ordinary 5,000 60

3. Share split - ordinary 2 for 1

4. Reissue treasury share 3,000 40

5. Shareholders donated 15,000 ordinary shares to the corporation. Subsequently, 10,000 donated shares were reissued at P40 per share.

6. Net income for the year was P500,000.

7. Appropriated retained earnings equal to the cost of treasury shares.

Q6) What amount should be reported as total share premium at year-end?

A. 1,130,000

B. 2,230,000

C. 2,780,000

D.2,880,000

Q7) What amount should be reported as unappropriated retained earnings at year-end?

A. 3,000,000

B. 2,290,000

C. 2,740,000

D. 2,800,000

8) What amount should be reported as shareholders' equity?

A. 7,210,000

B. 7,330,000

C. 7,420,000

D. 7,620,000

Q9) Jose Company began operations on January 1, 2018 by issuing at P15 per share one-half of the 800,000 ordinary shares of P10 par value that had been authorized for sale. In addition, the entity had 500,000, P5 par value, 6% preference shares authorized. During 2018, the entity had P1,000,000 net income and declared P200,000 of dividends. The following transactions relate to 2019:

Issued an additional 100,000 ordinary shares for P18 per share.

Issued 150,000 preference shares for P8 per share.

Authorized the purchase of a custom-made machine to be delivered in January 2020. The entity restricted P300,000 of retained earnings for the purchase of the machine.

Sold an additional 50,000 preference shares for P10 per share.

Reported P2,500,000 of net income and declared a dividend of P800,000 to shareholders of record on January 15, 2020, to be paid on February 1, 2020.

What is the total shareholders' equity on December 31, 2019?

A. 12,000,000

B. 11,700,000

C. 11,200,000

D. 13,000,000

10) The following balances are shown in the shareholders' equity of Rumoosh Company on December 31, 2018:

Preference share capita, P10 par, 100,000 shares 1,000,000

Ordinary share capital, P10 par, 500,000 shares 5,000,000

Share premium - preference 50,000

Share premium - ordinary 200,000

Retained earnings 100,000

Total 6,350,000

During 2019, the following transactions pertaining to the shareholders' equity were completed:

Retirement of 5,000 preference shares at P11 per share.

Purchase of 5,000 ordinary shares at P12 per share.

Share split, ordinary, 2 for 1.

Reissue of 2,000 treasury shares at P8 per share.

Profit for 2019, P300,000.

The total shareholders' equity on December 31, 2019 is

A. 6,556,000

B. 6,551,000

C. 6,350,000

D. 6,251,000

Use the following information for the next two (2) questions:

Gargantuan Company was organized on January 1, 2016 with 100,000 authorized shares of P100 par value. During 2016, the following transactions occurred.

January 15 Sold 30,000 shares at P150 per share.

February 14 Issued 2,000 shares for legal services with a fair value of P250,000. The shares on this date are quoted at P140 per share.

March 27 Purchased 5,000 treasury shares at a cost of P120 per share.

October 31 Issued P5,000,000 convertible bonds at 120. The bonds are quoted at 98 without the conversion feature.

November 5 Declared a 2-for-1 share split when the market value of the share was P160.

December 17 Sold 10,000 shares at P75 per share.

December 31 The net income for the year was P2,000,000.

Q11) How much shares are outstanding as of December 31, 2016?

A. 74,000

B. 69,000

C. 64,000

D. 54,000

Q12) What amount should be reported as share capital on December 31, 2016?

A. 4,800,000

B. 3,700,000

C. 3,200,000

D. 3,000,000

Q13) What amount should be reported as share premium on December 31, 2016?

A. 2,930,000

B. 2,900,000

C. 2,650,000

D. 1,800,000

Q14) What is the total shareholders' equity on December 31, 2016?

A. 8,030,000

B. 8,000,000

C. 6,900,000

D. 6,000,000

Q15) At December 31, 2019, So Sick Company had 30,000 shares of P100 par, 5% cumulative preference share outstanding. No dividends were in arrears as of December 31, 2017. So Sick did not declare a dividend during 2018. During 2019, So Sick paid a cash dividend of P100,000 on its preference share. So Sick should report dividends in arrears in its 2019 financial statements as a/an.

A. Accrued liability of P150,000

B. Disclosure of P150,000

C. Accrued liability of P200,000

D. Disclosure of P200,000

Q16) On July 1, 2021, Battery Company's board of directors declared a 10% share dividend. The market price of Batter's 400,000 outstanding ordinary shares, P50 par value, was P80 per share on the date of declaration. The share dividend was distributed on September 1, 2021, when the market price of the share was P100 per share.

What amount should be charged to the Retained Earnings account as a result of the share dividend?

A. -0-

B. 2,000,000

C. 3,200,000

D. 4,000,000

Q17) Harmony Corporation declared share dividends of 1 share for every 5 shares owned on its 200,000 issued and outstanding shares with a par value of P50 per share. at the time of declaration, the market value of ordinary shares was P80 per share and P100 per share at the time the shares were issued. What amount should be charged to Retained Earnings account and credit liability accounts, respectively?

A. 2,000,000 and -0-

B. 2,500,000 and 2,500,000

C. 4,000,000 and -0-

D. 4,000,000 and 4,000,000

Q18) The following share dividends were declared and distributed by Party Company:

Percentage of ordinary shares outstanding

Market value Par value

10% 225,000

150,000 25%

600,000 450,000

How much should be debited to Retained Earnings at the time of declaration?

A. 600,000

B. 675,000

C. 750,000

D. 825,000