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EASY QUESTIONS (7 PROBLEMS) PROBLEM 1 The following information was taken from the records of Crocodile Boutique for the month of December: Sales Sales returns Additional markups Mark-up cancellations Markdowns Markdown cancellations Freight-in Purchases at cost Purchases at retail Purchase returns at cost Purchase returns at retail Beginning inventory at cost Beginning inventory at retail
198,000 4,000 20,000 3,000 18,600 5,600 4,800 96,000 176,000 4,000 6,000 60,000 93,000
What is the cost of Crocodile’s ending inventory under the retail inventory (average cost) method? A. P 40,880 C. P 51, 296 B. P 43,070 D. P 43,500 The difference in the calculation of the cost-to-retail percentage applying the conventional retail method and the average cost method is that average method cost. A. Excludes beginning inventory B. Excludes markdowns C. Includes markups D. Includes markdowns PROBLEM 2 Cherry Inc. received dividends from its investments in ordinary shares during the year ended December 31, 2018, as follows: A cash dividend of P720, 000 is received from JJ Corporation. (Cherry, Inc. owns a 2% interest in JJ) A cash dividend of P3, 600,000 is received from VV Corporation. (Cherry, Inc. owns a 30% interest in VV) A stock dividend of 18,000 shares from YY Company was received on December 15, 2018, on which date the quoted market value of YY’s shares was P20.00 per share. Cherry Inc. owns less than 1% of YY’s ordinary shares. What amount of dividend income should be reported by Cherry, Inc in its 2018 income statement? A. P1,080,000 C.P4,320,000 B. P4,680,000 D.P720,000
PROBLEM 3 Omega Company sells its products in expensive, reusable containers. The customer is charged a deposit for each container delivered and receives a refund for each container returned within two years after the year of delivery. Omega accounts for the containers not returned within the time limit as being sold at the deposit amount. Information for 2018 is as follows: Containers held by customers at December 31, 2017, from deliveries in: 2016 85,000 2017 240,000 325,000 Containers delivered in 2018
Containers returned in 2018 from deliveries in: 2016 57,500 2017 140,000 2018 157,000 354,500
How much revenue from container sales should be recognized for 2018? A. P 127,500 C. P27,500 B. P 267,500 D. 85,000 What is the total amount of Omega Company’s liability for returnable containers at December 31, 2018? A. P 373,000 C. P 267,500 B. P 400,500 D. P 430,000
PROBLEM 4 OHRID Company purchased machinery on December 31, 2018, paying, P80, 000 down and agreeing to pay the balance in four equal installments of P60, 000 payable each December 31. Implicit in the purchase price is an assumed interest of 12%. The following data are abstracted from the present value tables: Present value of 1 at 12% for 4 periods Present value of an ordinary annuity of at 12% for 4 periods
What is the cost of the machinery purchased on December 31, 2018? A. P233,083 C. P262,241 B. P320,000 D. P290,842 How much interest expense should be reported in Ohrid’s income statement for the year ended December 31, 2019? A. P38, 131 C. P17,293 B. P21,869 D. P42,707 What is the carrying amount value of the note at December 31, 2020? A. P120,000 C. P99,310 B. P144,110 D. P101,403
PROBLEM 5 Liton Company buys and sells securities expecting to earn profits on short-term differences in price. During 2016, Liton Company purchased the following trading securities: Security A B C
Cost 195,000 300,000 660,000
Fair Value 12/31/2016 225,000 162,000 678,000
Before any adjustments related to these trading securities, Liton Company had net income of P900, 000. What is Liton’s net income after making any necessary trading security adjustments? A. P900,000 C. P762,000 B. P810,000 D. P948,000 What would Liton’s net income be if the fair value of security B were P285, 000.00? A. P867,000 C. P885,000 B. P900,000 D. P933,000
PROBLEM 6 On November 17, 2018, Bautista Airways entered into a noncancelable commitment to purchase 3,000 barrels of aviation fuel for P9, 000,000 on March 31, 2019. Bautista entered into this purchase commitment to protect itself against the volatility in the aviation fuel market. By December 31, 2018, the purchase price of aviation fuel had fallen to P2, 200 per barrel. However, by March 31, 2019, when Bautista too delivery of the 3,000 barrels, the price of aviation fuel had risen to P3, 100 per barrel. Based on the above and the result of your audit, answer the following: The loss on purchase commitment on December 31, 2018 is: A. P1,500,000 C. P2,400,000 B. P900,000 D. P0 The gain on purchase commitment on March 31, 2019 is: A. P2,700,000 C. P2,400,000 B. P300,000 D. P0 PROBLEM 7 In connection with your audit of Caloocan Corporation for the year ended December 31, 2018, you gathered the following: Current account at Metrobank Current account at BPI Payroll account Foreign bank account – restricted (in equivalent pesos) Postage stamps Employee’s postdated check IOU from controller’s sister Credit memo from a vendor for a purchase return
2,000,000 (100,000) 500,000 1,000,000 1,000 4,000 10,000 20,000
Traveler’s check NSF check Money Order Petty cash fund (P4,000 in currency and expense receipts for P6,000) Treasury bills, due 3/30/19 purchased 12/29/18 Treasury bills, due 1/31/19 purchased 2/1/18
50,000 15,000 30,000 10,000 200,000 300,000
Compute for the cash and cash equivalents that will be reported on the December 31, 2018 statement of financial position. A. P2,784,000 C. P2,790,000 B. P3,084,000 D. P2,704,000
AVERAGE QUESTIONS (7 PROBLEMS) PROBLEM 1 The equity section of Ronda Corporation’s statement of financial position as of December 31, 2017 is as follows: Shareholder’s Equity Share capital, P5 par value,; authorized, 2,000,000 2,000,000 shares; issued ,400,000 shares Share premium 850,000 Retained earnings 3,000,000 5,850,000 The following events occurred during 2018: January 5 January 16 February 10
10,000 shares were sold for P 9 per share Declared a cash dividend of P0.40 per share , payable February 15 to shareholders of record on February 5 40,000 shares were issued for P11 per share
A 40% share dividend was declared and issued. Market value per share is currently P15
A two-for-one split was carried out. The par value of the share was to be reduced to P2.50 per share. Market value on March 31 was P18 per share A 10% share dividend was declared and issued. Market value is currently P10 per share
July 1 August 1 December 31
A cash dividend of P0.40 per share was declared , payable September 1 to shareholders of record on August 21 Profit for 2018 was P 1,880,000
Based on the above and the result of your audit, answer the following: 1. Number of shares issued and outstanding as of December 31, 2018 A. 2,079,000 C. 1,188,000 B. 1,386,000 D. 346,500
2. Balance of share capital as of December 31, 2018 A. 3,465,000 C. 3,228,750 B. 3,780,000 D. 3,622,500 3. Balance of share premium as of December 31, 2018 A. 2,075,000 C. 1,760,000 B. 2,547,500 D. 3,695,000 4. Balance of retained earnings as of December 31, 2018 A. 381,600 C. 1,094,400 B. 3,362,400 D. 2,001,600 PROBLEM 2 In connection with your audit of the Kent Company, you were asked to prepare comparative data from the company’s inception to the present. The following were gathered during your audit:
Kent Company’s charter became effective on January 2, 2014 when 80,000, P10 par value, ordinary shares and 40,000, 5% cumulative non-participating, preference shares were issued. The ordinary share was sold at P12 per share and the preference share was sold at its par value of P100 per share.
Kent was unable to pay preference dividends at the end of its first year. The owners of the preference shares agreed to accept 2 ordinary shares for every 50 shares of preference shares owned in discharge of the preference share dividends due on December 31, 2014. The shares were issued on January 2, 2015. The fair value was P30 per share for ordinary on the date of issue.
Kent Company acquired all outstanding shares of Melvin Corporation on May 1, 2016, in exchange for 40,000 ordinary shares of Kent.
Kent split its ordinary shares 3 for 2 on January 1, 2017, and 2 for 1 on January 1, 2018.
Kent offered to convert 20% of the preference shares to ordinary on the basis of 2 ordinary shares for 1 preference share. The offer was accepted and the conversion was made on July 1, 2018.
No cash dividends were declared on ordinary shares until December 31, 2008. Cash dividends per ordinary share were declared and paid as follows:
2016 2017 2018
December 31 P 4.00 P 5.00 P 2.00
June 30 P 3.00 P 2.50
Based on the above and the result of your audit, determine the following: 1. Outstanding number of ordinary shares as of December 31, 2018 A. 364,800 C. 372,800 B. 684,800 D. 380,800
2. Outstanding number of preference shares as of December 31, 2018 A. 40,000 C. 32,000 B. 24,000 D. 96,000 3. Amount of cash dividends declared and paid to ordinary shareholders for the year 2017 A. P972,800 C. P1,459,200 B. P608,000 D. P1,981,440 4. Amount of cash dividends declared and paid to ordinary shareholders for the year 2018 A. P3,911,040 C. P1,713,600 B. P3,041,600 D. P1,673,600 PROBLEM 3 The December 31 year-end financial statements of Karen Company contained the following errors:
Ending inventory Depreciation expense
December 31, 2018 48,000 understated 11,500 understated
December 31, 2019 40,500 overstated -
An insurance premium of P 330,000 was prepaid in 2018 covering the years 2018, 2019, and 2020. The entire amount was charged to expense in 2018. In addition, on December 31, 2019, fully-depreciated machinery was sold for P 75,000 cash, but the sale was not recorded until 2020. There were no other errors during 2018 and 2019, and no corrections have been made for any of the errors. Ignore income tax effects. Compute for the following: 1. What is the total effect of the errors on Karen’s 2019 net income? A. 123,500 overstatement B. 27,500 overstatement C. 192,500 understatement D. 177,500 understatement 2. What is the total effect of the errors on the amount of Karen’s working capital at December 31, 2019? A. 75,500 overstatement B. 40,500 overstatement C. 225,500 understatement D. 144,500 understatement 3. What is the total effect of the errors on the balance of Karen’s retained earnings at December 31, 2019? A. 156,000 understatement B. 87,000 overstatement C. 133,000 understatement D. 85,000 understatement
PROBLEM 4 Barbados, Inc. has been using the accrual basis of accounting. However, an examination of the records reveals that some expenses and revenues have been handled on a cash basis by the inexperienced bookkeeper of the company. Income statements prepared by the bookkeeper reported P 145,000 net income for 2018 and P185, 000 net income for 2019. Further review of the records reveals that the following items were handled improperly.
Rent of P 6,500 was received from a lessee on December 23, 2018. It was recorded as income at that time even though the rental pertains to 2019.
Salaries payable on December 31 have been consistently omitted from the records of that date and have been recorded as expenses when paid in the following year. The salary accruals recorded in this manner were. December 31, 2017 December 31, 2018 December 31, 2019
5,500 7,500 4,700
Invoices for office supplies purchased have been charged to expense accounts when received. Inventories of supplies on hand at the end of each year have been ignored, and no entry has been made for them. December 31, 2017 December 31, 2018 December 31, 2019
6,500 3,700 7,100
Compute for the following: 1. What is the corrected net income for 2018? A. 133,700 C. 146,700 B. 144,200 D. 139,300 2. What is the corrected net income for 2019? A. 184,700 C. 185,600 B. 197,700 D. 190,900
PROBLEM 5 In connection with your audit of the cash account of Annie Corp., you gathered the following information: Balance per bank, December 1, 2018 Total bank receipts (credits) in December Balance per bank, December 31, 2018 Outstanding checks, November 30, 2018 (including P12,000 paid by bank in December) Outstanding checks , December 31, 2018 (including checks issued in November) Deposit in transit, November 30, 2018 A customer’s check received on December 4, 2018, was returned by bank on
145,000 346,000 114,500 67,000 94, 162 39, 458
December 7 marked “NSF”. It was redeposited on December 8, 2018. The only entry made was to take up the collection on December 4, 2018 1. What is the total book receipts in December? A. P 295, 399 B. P 306, 542
C. P 334, 857 D. P 346, 000
2. What is the total bank disbursements in December? A. P315,500 C. P231,500 B. P376,500 D. P201,000 3. What is the total book disbursements in December? A. P447,519 C. P403,662 B. P331,519 D. P392,519 PROBLEM 6 Afghanistan Company has been paying regular quarterly dividends to its shareholders. The following equity transactions are shown in the company’s books: January 1 February 15 March 31 May 13 June 16 June 30
P2 par value ordinary shares; (1,600,000 shares outstanding; 3,000,000 shares authorized) Issued 100,000 new shares at P5 Paid quarterly dividends of P2, 550,000 P2, 000,000 of P1, 000 bonds were converted to ordinary shares at the rate of 100 shares per P1, 000 bond Issued an 11% stock dividend Paid quarterly dividends. The dividend per share is the same as that paid in the first quarter
No other equity transactions occurred after June 30. 1. What is the amount of dividend per share that Afghansitan paid on March 31? A. P1.50 C. P1.59 B. P0.85 D. P1.70 2. What is the amount of dividend that Afghanistan will have to pay in the third quarter in order to pay the same dividend rate as that paid in previous quarters? A. P2,850,000 C. P3,163,500 B. P2,997,000 D. P3.585,300 3. What is the total amount of dividends to be paid during the current year? A. P10,305,900 C. P13,305,900 B. P12,040,500 D. P12,654,000 PROBLEM 7 Iligan & Associates maintains its records on the cash basis. You have been engaged to convert its cash basis income statement to the accrual basis. The cash basis income statement, along with additional information, follows: Iligan & Associates Income Statement (Cash Basis) For the Year Ended December 31, 2018
Cash receipts from customers Cash payments: Wages Taxes Insurance Interest Net Profit
2,800,000 1,200,000 520,000 320,000 200,000
Additional Information: Accounts receivable Wages Payable Taxes Payable Prepaid Insurance Accumulated Depreciation Interest Payable
December 31, 2017 240,000 160,000 152,000 32,000 600,000 72,000
December 31, 2018 400,000 120,000 112,000 64,000 760,000 24,000
No plant assets were sold during 2018. How much is the profit before income tax under the accrual basis of accounting? A. 880,000 C. 720,000 B. 816,000 D. 656,000
DIFFICULT QUESTIONS (7 PROBLEMS) PROBLEM 1 The HVR Company included the following in its notes receivable as of December 31, 2018: Note receivable from sale of land Note receivable from consultation Note receivable from sale of equipment
P2, 640,000 3,600,000 4,800,000
The following transactions during 2018 and other information relate to the company’s notes receivable: a) On January 1, 2018, HVR Company sold a tract of land to Triple X Company. The land, purchased 10 years ago, was carried on HVR’s books at P1, 500,000. HVR received a noninterest-bearing note for P2, 640,000 from Triple X. The note is due on December 31, 2019. There was no established exchange price for the land. The prevailing interest rate for this note on January 1, 2018 was 10%. b) On January 1, 2018, HVR Company received a 5%, P3, 600,000 promissory note in exchange for the consultation services rendered. The note will mature on December 31, 2020, with interest receivable every December 31. The fair value of the services rendered is not readily determinable. The prevailing rate of interest for a note of this type was 10% on January 1, 2018. c) On January 1, 2018, HVR Company sold an old equipment with a carrying amount of P4, 800,000, receiving P7, 200,000 note. The note bears an interest rate of 4% and is to be repaid in 3 annual installments of P2, 400,000 (plus interest on the outstanding balance). HVR received the first payment on December 31, 2018. There is no established market value for the equipment. The market interest rate for similar notes was 14% on January 1, 2018.
Note: Round off present value factors to four decimal places and final answers to the nearest hundred. 1. What amount of consultation fee revenue should be recognized in 2018? A. P3,600,000 B. P2,705,000 C. P4,047,500 D. P3,152,500 2. What amount should be reported as gain on sale of equipment? A. P994,800 B. P2,400,000 C. P1,162,700 D. P1,237,300 3. The amount to be reported as noncurrent notes receivable on December 31, 2018 is A. P7,482,200 B. P6,037,300 C. P5,477,500 D. P7,877,600 4. The amount to be reported as current notes receivable on December 31, 2018 is A. P4,800,000 B. P2,400,200 C. P4,404,900 D. P7,440,000 5. How much interest income should be recognized in 2018? A. P974,200 B. P756,000 C. P1,378,700 D. P1,160,500 PROBLEM 2 Supporting records of MAYON CORPORATION’s trading securities portfolio show the following debt and equity securities: Security 400 ordinary shares Concave Co. P800,000 Tipo Co. 7% bonds P1,200,000 Turkey Co. 7 ½% bonds Totals
P 254,500 796,500 1,207,500 P2,258,500
P 243,000 774,000 1,218,900 P2,235,900
Interest dates on the bonds are January 1 and July 1. Mayon Corporation uses the income approach to record the purchase of bonds with accrued interest. During 2018 and 2019, Mayon completed the following transactions related to trading securities: 2018 Jan. 1 Received semiannual interest on bonds. Assume that the appropriate adjusting entry was made on December 31, 2017.
April 1 Sold P600,000 of 7 ½% Turkey bonds at 102 plus accrued interest. May 21 Received dividend of P1.25 per share on the Concave ordinary share capital. The dividend had not been recorded on the declaration date. July
1 Received semiannual interest on bonds and then sold the 7% Tipo bonds at 97 ½.
Aug. 15 Purchased 200 shares of Newman, Inc. ordinary share capital at P580 per share plus brokerage fees of P500. Nov. 1 Purchased P500,000 of 8% Toll Co. bonds at 101 plus accrued interest. Brokerage fees were P1,250. Interest dates are January 1 and July 1. Dec. 31 Market prices of securities were: Concave ordinary shares 7 ½% Turkey bonds 8% Toll bonds Newman ordinary shares
P550 101 ¾ 101 P583.75
2019 Jan. 2 Recorded the receipt of semiannual interest on bonds. Feb.
1 Sold the remaining 7 ½% Turkey bonds at 101 plus accrued interest.
1. What is the total interest and dividend income for 2018? A. P125,166 B. P164,416 C. P91,417 D. P98,804 2. What amount should be reported as gain on sale of trading securities in 2018? A. P2,550 B. P6,000 C. P8,550 D. P3,450 3. What amount of unrealized gain or loss should be reported in the income statement for the year ended December 31, 2018? A. P21,200 unrealized gain B. P21,200 unrealized loss C. P6,150 unrealized gain D. P6,150 unrealized loss 4. What is the carrying amount of the remaining trading securities on December 31, 2018? A. P1,481,000 B. P1,450,450 C. P1,473,450 D. P1,452,250 5. What is the loss on the sale of the remaining Turkey bonds on February 1, 2019? A. P4,500 B. P10,500 C. P13,500
D. P750 PROBLEM 3 The following information is based on a first audit of SABILA COMPANY. The client has not prepared financial statements for 2016, 2017 or 2018. During these years, no accounts have been written off as uncollectible, and the rate of gross profit on sales has remained constant for each of the three years. Prior to January 1, 2016, the client used the accrual method of accounting. From January 1, 2016 to December 31, 2018, only cash receipts and disbursements records were maintained. When sales on account were made, they were entered into the subsidiary accounts receivable ledger. No general ledger postings have been made since December 31, 2015. As a result of your examination, the correct data shown in the table below are available: December 31, 2015
December 31, 2018
P28,200 1,800 800 2,200 P33,000
Accounts payable for inventory purchased
Accounts receivable balances: Less than one year old One to two years old Two to three years old Over three years old Total Accounts Receivable
Cash received on accounts receivable: 2016
Applied to: Current year collections Accounts of the prior year Accounts of two years prior Total
P148, 800 13, 400 600 P162,800
P161,800 15,000 400 P177,200
P208,800 16,800 2,000 P227,600
Cash disbursements for inventory purchased
1. The company’s sales revenue for the three-year period amounted to: A. P658, 200 C. P625,400 B. P74,200 D. P415,300 2. What is the company’s total sales revenue for 2017? A. P206,400 B. P183,600
C. P268,200 D. P180,400
3. The aggregate amount of purchases for the three-year period is: A. P131,000 C. P434,000 B. P440,000 D. P446,000
4. What is the company’s gross profit ratio in each of the three-year period? A. 33.33% C. 35.16% B. 28.35% D. 31.15% 5. What is the company’s gross profit for each of the three-year period? 2016 2017 2018 A. 60,933 68,200 80,000 B. 55,533 60,133 79,000 C. 122,400 137,600 178,800 D. 61,200 68,800 89,400
PROBLEM 4 The following information was obtained in connection with the audit of Pinky Company’s cash accounts as of December 31, 2018. Outstanding checks, November 30, 2018 Outstanding checks, December 31, 2018 Deposit in transit, November 30, 2018 Cash balance per general ledger, December 31, 2018 Actual company collections from its customers during December Company checks paid by bank in December Bank service charges recorded on company books in December Bank service charges per December bank statement Deposits credited by bank during December November bank service charges recorded on company books in December
16,250 12,500 12,500 37,500 152,500 130,000 2,500 3,250 145,000 1,500
The cash receipts book of December is underfooted by P2, 500.00. The bank erroneously charged the company’s account for a P 3,750 check of another depositor. The bank error was corrected in January 2019. 1. What is the book balance on November 30, 2018? A. 16,250 C. 37,500 B. 21,250 D. 35,000 2. What is the bank balance on November 30, 2018? A. 23,000 C. 43,500 B. 18,500 D. 16,250 3. What is the bank balance on December 31, 2018? A. 21,500 C. 31,000 B. 26,500 D. 33,250
PROBLEM 5 The following accounts were included in the unadjusted trial balance of BUNCHING COMPANY as of December 31, 2018: Cash Accounts receivable
Inventory Accounts payable Accrued expenses
6,050,000 4,201,000 431,000
During your audit, you noted that Bunching Company held its cash books open after year-end. In addition, your audit revealed the following: 1. Receipts for January 2019 of P654, 600 were recorded in the December 2018 cash receipts book. The receipts of P360, 100 represent cash sales and P294, 500 represent collections from customers, net of 5% cash discounts. 2. Accounts payable of P372, 400 was paid in January 2019. The payments on which discounts of P12, 400 were taken, were included in the December 2018 check register. 3. Merchandise inventory is valued at P6, 050,000 prior to any adjustments. The following information has been found relating to certain inventory transactions:
The invoice for goods costing P175, 000 was received and recorded as a purchase on December 31, 2018. The related goods, shipped FOB Destination were received on January 4, 2019, and thus were not included in the physical inventory.
A P182, 000 shipment of goods to a customer on December 30, 2018, terms FOB destination, are not included in the year-end inventory. The goods cost P130, 000 and were delivered to the customer on January 3, 2019. The sale was properly recorded in 2019.
Goods costing P637, 500 were shipped on December 31, 2018, and were delivered to the customer on January 3, 2019. The terms of the invoice were FOB shipping point. The goods were included in the 2018 ending inventory even though the sale was recorded in 2018.
Goods costing P217, 500 were received from a vendor on January 4, 2019. The related invoice was received and recorded on January 6, 2019. The goods were shipped on December 31, 2018, terms FOB shipping point.
Goods valued at P275, 000 are on consignment with a customer. These goods are not included in the inventory figure.
Goods valued at P612, 800 are on consignment from a vendor. These goods are not included in the physical inventory.
Based on the above and the result of your audit, determine the adjusted balances of the following as of December 31, 2018: 1. Cash A. 963,200
2. Accounts receivable A. 2,908,600
3. Inventory A. 6,035,000
PROBLEM 6 In 2014, Joshua Company purchased property with natural resources for P12, 400,000. The property was relatively close to a large city and had an expected residual value of P3, 000,000. However, P1, 200,000 will have to be spent to restore the land for use. The following information relates to the use of the property: a. In 2014, Joshua spent P800, 000 in development costs and P600, 000 in buildings on the property. Joshua does not anticipate that the buildings will have any utility after the natural resources are depleted. b. In 2015 and 2017, P600, 000 and P1, 600,000, respectively, were spent for additional developments on the mine c. The tonnage mined and estimated remaining tons for years 2014-2018 are as follows: Year Tons Extracted Estimated Tons Remaining 2014 0 5,000,000 2015 1,500,000 3,500,000 2016 1,800,000 2,000,000 2017 1,700,000 900,000 2018 900,000 0 Based on the preceding information, calculate the depletion and depreciation for 2017: Depletion Depreciation A. 2,891,308 153,000 B. 3,944,000 153,000 C. 2,891,308 274,615 D. 3,944,000 274,615
PROBLEM 7 You have been assigned to the audit of MALAYSIA CO., a manufacturing company. You have been asked to summarize the transactions for the year ended December 31, 2016, affecting shareholders’ equity and other related accounts. The shareholders’ equity section of Malaysia’s December 31, 2015, statement of financial position follows: Ordinary share capital, P2 par value, 1, 000, 000 shares authorized , 180,000 shares issued, 177, 580 shares outstanding……………………..P 360,000.00 Share premium – issuance ……………………………………………………..…3, 640, 000.00 Share premium – treasury shares……………………………………………….…….45, 000.00 Retained earnings……………………………………………………………………649, 378.00 Cost of 2, 420 treasury shares……………………………………………………... (145, 200.00) Total Shareholders’ Equity………………………………………………………P 4, 549, 178.00 You have extracted the following information from the accounting records and audit working papers. 2016 Jan. 15 Malaysia reissued 1, 300 treasury shares for P 40 per share. The 2, 420 treasury shares on hand at December 31, 2015, were purchased in one block in 2014.
Feb. 1 Sold 180, P 1,000, 9% bonds due February 1, 2026, at 103 with one detachable share warrant attached to each bond. Interest is payable annually on February 1. The fair market value of the bonds without the share warrants is 95. The detachable warrants have a fair value of P 50 each and expire on February 1, 2017. Each warrant entitles the holder to purchase 10 ordinary shares at P40 per share. May 6 2,800 ordinary shares were subscribed for at P44 per share. 40% of the subscription was collected. May 20 The balance due on 2, 400 shares was received and those shares were issued. Nov 1 There were 110 share warrants detached from the bonds and exercised. Malaysia’s net income for 2016 is P 950,000.00 Based on the preceding information, determine the correct December 31, 2016, balance of each of the following: 1. Ordinary Share Capital A. P 364, 800
B. P 375, 800
C. P 372,600.00
D. P 367, 000.00
2. Share premium – issuance A. P 3, 827, 200 B. P 3, 808, 200
c. P 3, 805, 065
d. P 3, 791, 400
3. Share premium – treasury shares a. P 19,000.00 b. P 45, 000
c. P 187, 200
4. Retained Earnings (before appropriation for treasury shares) a. P 649, 378 b. P 1, 573, 378 c. P 1, 599, 378 5. Treasury Shares a. P 67, 200
b. P 145, 200.00
6. Total Shareholder’s Equity a. P 5, 722, 218 b. P 5, 716, 618
c. P93, 200
c. P 5, 720, 223
d. P 192, 800
d. P1, 454, 178
d. P142, 600
d. P 5, 717, 088