DR. FELIMON C.

AGUILAR MEMORIAL COLLEGE

Golden Gate Subd. Las Piñas City

Name: _____ Yr.: Sec: score: Date:_____________________

Practical Accounting 1 Shareholders’ Equity

1. Mara Company provided the following accounts at 5. Lei Company provided the following information at
year-end: year-end:
Authorized Share Capital 5,000,000 Share premium 1,000,000
Unissued share capital 2,000,000 Accounts payable 1,100,000
Subscribed Share Capital 1,000,000 Preference share capital, at par 2,000,000
Subscription Receivable 400,000 Ordinary share capital, at par 3,000,000
Share Premium 500,000 Sales 10,000,000
Retained Earnings unapprop. 600,000 Total expenses 7,800,000
Retained Earnings approp. 300,000 Treasury shares – ordinary, at cost 500,000
Revaluation Surplus 200,000 Dividends 700,000
Treasury Shares, at cost 300,000 Retained earnings – Jan. 1 1,000,000
What amount should be reported as shareholders’ What is the shareholders’ equity at year-end? (793)
equity at year-end? (791) a. 8,000,000 c. 5,800,000
a. 5,200,000 c. 4,900,000 b. 8,500,000 d. 8,700,000
b. 5,500,000 d. 5,000,000 6. Bronze Company provided the following information
2. Ivy Company provided the following accounts at at year-end:

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year-end: Share capital 5,000,000

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Preference share capital autho, P100 par 5,000,000 Subscribed share capital 3,000,000

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Ordinary share capital authorized, P10 par 2,000,000
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Unissued preference share capital 1,800,000 Share premium 1,500,000
Unissued ordinary share capital 1,000,000 Cumulative translation adj. – debit 500,000

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Subscriptions receivable, ordinary 180,000 Treasury share, at cost 700,000
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Subscriptions receivable, preference 190,000 Retained earnings 1,000,000
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Preference Share Capital Subscribed 300,000 Cumulative unrealized gain on futures contract
Ordinary Share Capital Subscribed 220,000 designated as cash flow hedge 600,000
Treasury preference shares (700 sh @ cost)680,000 What is the contributed capital at year-end?
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Share premium 850,000 a. 9,500,000 c. 8,500,000

Retained Earnings 2,000,000 b. 7,500,000 d. 6,800,000
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What is the Shareholders’ equity at year-end? 7. Moon Company reported the following shareholders’
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a. 6,890,000 c. 6,520,000 equity:

b. 7,200,000 d. 7,880,000 Preference share capital, par value P15,
3. Pangs Company revealed the following shareholders’
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authorized 200,000 shares 2,550,000

equity at year-end: Share premium – preference 150,000
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Preference share capital, P100 par 2,300,000 Ordinary share capital, no par, P50
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Share premium – PS 805,000 stated value, 100,000 shares authorized 3,000,000

Ordinary share capital, P15 par 5,250,000 In the statement of shareholders’ equity, what is the
Share premium 2,750,000 number of issued and outstanding shares for each
Subscribed ordinary share capital 500,000 share capital? (794)
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Retained earnings 1,900,000 Ordinary Preference

Note payable 4,000,000
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a. 60,000 170,000
Subscriptions receivable- ordinary 400,000 b. 60,000 180,000
How much is the legal capital? (792) c. 63,000 170,000
a. 8,050,000 c. 9,950,000 d. 63,000 180,000
b. 7,650,000 d. 11,605,000
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8. Kaya Company was organized on January 1, 2014

4. Neggy Company provided the following adjusted trial
with authorized share capital of 100,000 shares of
balance at year-end:
P20 par value. During the year, the entity had the
Share capital 15,000,000
following transactions affecting shareholders’ equity:
Share premium 5,000,000
Treasury shares, at cost 2,000,000
Jan. 10 Issued 25,000 shares at P22 per share
Unrealized loss on forward contract
Mar. 25 Issued 1,000 shares for legal services when
designated as cash flow hedge 1,000,000
Retained earnings unapprop. 6,000,000 the fair value was P24 per share
Retained earnings approp. 3,000,000 Sept. 30 Issued 5,000 shares for as tract of land
Revaluation surplus 4,000,000 when the fair value was P26 per share.
Cumulative translation adj. – credit 1,500,000 What amount should be reported as share premium
What amount should be reported as shareholders’ on December 31, 2014?
equity? a. 84,000 b. 80,000 c. 54,000 d. 50,000
a. 31,500,000 c. 28,500,000 9. West Company issued 1,000 shares with P5 par to
b. 32,500,000 d. 25,500,000 Howe as compensation for 1,000 hours of legal
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 services performed. Howe usually bills P160 per hour from 100,000 P20 par value shares to 200,000 P10
for legal services. On the date of issuance, the share par value shares. The shareholders’ equity accounts
was trading on a public exchange at P140. By what immediately before issuance of the share split shares
amount should the share premium account increase were as follows:
as a result of the transaction? (795) Share capital, par value P20, 50,000 shares
a. 135,000 b. 140,000 c. 155,000 d. 160,000 outstanding 1,000,000
10. Polar Company issued 20,000 new P100 par ordinary Share premium (P3/share on issuance) 150,000
shares at a fair value of P180 each. The income tax Retained earnings 1,350,000
rate is 30%. The entity identified the following costs What should be the balances in the share premium
in relation to the share issue: and retained earnings accounts immediately after
Professional fees 400,000 the share split is effected? (797)
Internal management time in
managing the process 300,000 Share Premium Retained Earnings
What is the increase in equity as a result of the
issuance of shares? a. 0 500,000
a. 3,200,000 c. 2,900,000 b. 150,000 350,000
b. 3,320,000 d. 2,970,000 c. 150,000 1,350,000
11. At the beginning of the current year, Bongs d. 1,150,000 350,000
15. Precious Company was organized on January 1, 2014
Company, a closely-held entity, issued 6% bonds with
with an authorization of 1,200,000 ordinary shares
maturity value of P6,000,000, together with 10,000
with a par value of P6 per share. During the year, the
ordinary shares of P50 par value, for a combined
entity had the following capital transactions:
cash amount of P11,000,000. If the bonds were
issued separately, they would have sold for January 5 Issued 675,000 shares at P10 per share
P4,000,000 on an 8% yield to maturity basis. What

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July 28 Purchased 90,000 treasury shares at

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amount should be reported for share premium on P11 per share

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the issuance of the ordinary shares? December 31 Sold the 90,000 shares held in
a. 7,500,000
b. 6,500,000
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c. 5,500,000
d. 4,500,000
treasury at P18 per share
The entity used the cost method to record the

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12. Bamboo Company was organized on January 1, 2014. purchase and reissuance of the treasury shares.
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On that date, entity issued 200,000 P10 par value What is the total amount of share premium on
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shares at P15 per share. During the period January 1, December 31, 2014?
2014, through December 31, 2015, the entity a. 3,330,000 c. 2,700,000
reported net income of P750,000 and paid cash b. 2,070,000 d. 0
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dividends of P380,000. On January 5,2015,the entity 16. At the beginning of the current year, Alto Company
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purchased 12,000 treasury shares at P12 per share. declared a 1 for 5 reverse share split when the
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On December 31,2015, 8,000 treasury shares were market value of share was P100. Prior to the split,
sold at P8 per share and retired the remaining 4,000 the entity had 10,000 shares of P10 par value issued
and outstanding. What is the par value of share after
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shares. What is the shareholders’ equity on

December 31, 2015? (796) the share split? (798)
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a. 3,290,000 c. 3,338,000 a. 10 b. 20 c. 50 d. 2
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b. 3,306,000 d. 3,370,000 17. Becky Company issued 200,000 ordinary shares

13. Chiki Company disclosed the following shareholders’ when it began operations in 2012 and issued an
equity on January 1, 2014: additional 100,000 ordinary shares in 2013. The
Share capital, par value P20 entity also issued preference shares convertible to
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Authorized 50,000 shares; issued and 100,000 ordinary shares. In 2014, the entity
outstanding, 30,000 shares 600,000
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purchased 75,000 ordinary shares and held as

Share premium 150,000
Retained earnings 230,000 treasury. On December 31,2014, how many ordinary
During the year, the following transactions occurred shares were outstanding?
a. 400,000 c. 300,000
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relating to shareholders’ equity:

 1,000 shares were reacquired at P28 per share b. 325,000 d. 225,000
18. Lottie Company was incorporated on January 1, 2014
 900 shares were reacquired at P30 per share
 1,500 shares of treasury were sold at P32 per and provided the following information:
Jan 1 Number of shares authorized 100,000
share
Feb 1 Number of shares issued 80,000
July 1 Number of shares reacquired
The entity reported net income of P110,000 for the
but not canceled 10,000
current year. What amount should be reported as Dec 1 Two for one share split
shareholders’ equity on December 31, 2014? On December 31, 2014, what is the number of
ordinary shares outstanding?
a. 1,071,000 c. 1,083,000 a. 140,000 c. 150,000
b. 1,078,000 d. 973,000 b.160,000 d. 180,000
14. At the beginning of the current year, Bulatao 19. On January 1, 2014, Lavinia Company had 125,000
Company approved a two-for-one split of the entity’s issued shares and 25,000 shares held as treasury.
share capital and an increase in authorized shares
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 During the year, transactions involving share capital average cost of P130 per share. Before recording the
were as follows: cancelation of the treasury shares, the entity had the
Jan 1 through Oct 31 - 13,000 treasury shares were following shareholders’ equity:
distributed to officers as part of a share Share capital 625,000
compensation plan. Share premium 750,000
Nov 1 – a 3 for 1 split took effect Retained earnings 900,000
Dec 1 – the entity purchased 5,000 of its own shares Treasury shares, at cost 650,000
to discourage an unfriendly takeover. These shares On December 31, 2014, what amount should be
were not retired. reported as share capital outstanding? (801)
On December 31, 2014, how many shares were a. 0 b. 250,000 c. 500,000 d. 625,000
25. Joni Company issued all of the outstanding shares for
issued and outstanding? (799)
Issued Outstanding P390 in 2014. On January 31,2015, the entity
a. 375,000 334,000 acquired 200,000 shares at P360 per share and
b. 375,000 324,000 retired them. The equity accounts on December 31,
c. 334,000 334,000 2014 are as follows:
d. 325,000 324,000 Retained earnings 75,000,000
20. Nesty Company issued 100,000 ordinary shares. Of Share Premium 162,000,000
these 5,000 were held as treasury on January 1, Share Capital, P300 par value,
2014. During the year, the following transactions 2,000,000 shares authorized,
occurred: 1,800,000 shares issued
May 1 1,000 shares of treasury were sold and outstanding 540,000,000
Aug 1 10,000 unissued shares were sold What is the balance in the share premium account
Nov 15 A 2 for 1 share split took effect immediately after the retirement of the shares?
On December 31, 2014, how many shares issued and a. 156,000,000 c. 144,000,000

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outstanding? b. 150,000,000 d. 168,000,000

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Issued Outstanding 26. On March 1, 2014, Epi Company issued 10,000

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a. 220,000 212,000 ordinary shares with P20 par value and 20,000
b.
c.
220,000
222,000
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216,000
214,000
preference shares with P20 par value for a total of
P800,000. At this date, the ordinary share was selling

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d. 222,000 218,000
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for P36 and the preference share was selling for P27.
21. In 2013, Ryzza Company issued 5,000 shares of P10
What amount of the proceeds should be allocated to
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par value for P100 per share. In 2014, the entity

the preference share capital? (802)
acquired 2,000 of the shares at P150 per share and a. 600,000 c. 480,000
immediately canceled these 2,000 shares. In b. 540,000 d. 440,000
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connection with the retirement of the shares, what 27. During 2013, Bro Company issued 5,000 convertible
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amount is debited respectively to share premium preference shares of P100 par value for P110 per
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and retained earnings? (800) share. One share can be converted into three
a. 20,000 and 280,000 c. 180,000 and 100,000 ordinary shares with P25 par value at the option of
b. 100,000 and 180,000 d. 280,000 and 0 the preference shareholder. When the market value
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22. Buds Company reported the following equity

of the ordinary shares was P40, all of the preference
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accounts on January 1, 2014:

shares were converted. What amount should be
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Share Capital, P20 par 8,000,000

credited respectively to ordinary share capital and
Share premium 2,550,000
Retained Earnings 1,275,000 share premium as a result of the conversion?
All shares outstanding on January 1, 2014 were a. 375,000 and 175,000
b. 375,000 and 225,000
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issued in 2013 for P26 per share. On December 31,

c. 500,000 and 50,000
2014, the entity reacquired 20,000 shares at P24 a
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d. 600,000 and 0
share and retired them. Immediately after the shares 28. In 2014, Honey Company issued for P110 per share,
were retired, what is the balance of the share 15,000 convertible preference shares of P100 par
premium? value. One preference share may be converted into
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a. 2,430,000 c. 2,510,000
three ordinary shares with P25 par value at the
b. 2,470,000 d. 2,590,000
option of the preference shareholder. On December
23. Pengs Company was organized on January 1, 2014
31, 2015, all of the preference shares were
with 100,000 authorized shares of P100 par value.
converted into ordinary shares. The market value of
On January 5, the entity issued 75,000 shares at
the ordinary share at the conversion date was P40.
P140 per share. On December 31, the entity
What amount should be credited to ordinary share
purchased 5,000 shares at P110 per share. The par
capital on December 31, 2015?
value method is used to record the purchase of the
a. 1,125,000 c. 1,650,000
treasury shares. What is the balance of the share
b. 1,500,000 d. 1,800,000
premium from the treasury shares on December 31, 29. Black Company issued 8,000 convertible preference
2014? shares with P100 par value at P105 per share. One
a. 200,000 c. 50,000
preference share can be converted into three
b. 150,000 d. 0
ordinary shares with P25 par value at the option of
24. On December 31, 2014, Carlisle Company canceled
the shareholder.
5,000 shares of P25 par value held in treasury at an
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 Subsequently, all of the preference shares were par value at P15 per share. During the period January
converted into ordinary shares. The market value of 1, 2014 through December 31, 2015, the entity
the ordinary share on the date of conversion was reported net income of P450,000 and paid cash
P30. dividend of P230,000. On January 10, 2015, the
What amount should be credited to share premium entity purchased 6,000 treasury shares at P8 per
as a result of the issuance of the preference shares share and retired the remaining treasury shares.
and the subsequent conversion into ordinary shares? What amount should be reported as shareholders’
(803) equity on December 31, 2015? (805)
a. 120,000 b. 240,000 c. 200,000 d. 80,000 a. 1,720,000 c. 1,688,000
30. Negros Company was incorporated on January 1, b. 1,704,000 d. 1,680,000
2014 with the following authorized capitalization: 34. Penn Company began operations on January 1, 2014
200,000 ordinary shares, no par, stated value P100 by issuing at P15 per share one-half of the 950,000
per share ordinary shares of P10 par value that had been
200,000 preference shares, 20%, par value P50 per authorized for sale. In addition, the entity has
share 500,000 authorized preference shares of P5 par
During the year, the entity issued 150,000 ordinary
value. During 2014, the entity had P1,025,000 of net
shares for a total of P18,000,000 and 50,000
income and declared P230,000 of dividend. During
preference shares at P60 per share. In addition, on
2015, the entity had the following transactions:
December 15,2014, subscriptions for 20,000  Issued 100,000 ordinary shares for P17 per
preference shares were taken at a purchase price of share.
P100. These subscribed shares were paid for on  Issued 150,000 preference shares for P8 per
January 15, 2015. The net income for 2014 was share.
P5,000,000.  Authorized the purchase of a custom-made

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What amount should be reported as total machine to be delivered in January 2016. The

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contributed capital on December 31, 2014? entity restricted P300,000 of retained earnings

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a. 28,000,000 c. 23,000,000
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b.21,000,000 d. 26,000,000
 Issued additional 50,000 preference shares for
31. Hanna Company reported the following

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P9 per share.
shareholders’ equity on January 1, 2014:
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 Reported P 1,215,000 of net income and
Share capital, P10 par, outstanding
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225,000 shares 2,250,000 declared on December 31, 2015 a cash dividend

Share premium 900,000 of P635,000 to shareholders’ of record on
Retained earnings 2,190,000 January 15, 2016 to be paid on February 1, 2016.
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During the year, the entity had the following

transactions: What is the shareholders’ equity on December 31,
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 Acquired 6,000 treasury shares for P270,000 2015?

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 Sold 3,600 treasury shares at P50 a share

 Sold the remaining treasury shares at P41 per a. 11,850,000 c. 12,485,000
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share b.11,550,000 d. 7,920,000

35. Marinduque Company provided the following
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What is the total amount of share premium on

December 31, 2014? (804) postclosing trial balance at year-end:
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a. 891,600 c. 908,400 DEBIT CREDIT

b.870,000 d. 927,600 Accounts Payable
32. Juan Company was organized on January 1, 2014 and accrued liabilities 3,000,000
Accounts receivable 6,000,000
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with 100,000 authorized shares of P100 par value.

Accumulated depreciation 2,500,000
The following transactions occurred: Allowance for doubtful accounts 800,000
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Jan 15 Sold 30,000 shares at P150 per share Bonds payable 5,000,000
Feb 14 Issued 2,000 shares for legal services with a Property, plant and
fair value of P300,000. The shares on this equipment 11,000,000
date are quoted at P160 per share Cash 2,500,000
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Mar 27 Purchased 5,000 treasury shares at a cost of Ordinary share capital, P50 par value 6,000,000
P12 per share Dividends Payable 200,000
Oct 31 Issued P4,000,000 convertible bonds at 110. Inventory 8,000,000
The bonds are quoted at 97 without the Available for sale securities 3,500,000
conversion feature. Investment in equity
Nov 5 Declared a 2-for-1 share split when the securities, at cost 2,000,000
Unrealized loss on interest rate swap
market value of the share was P160.
designated as cash flow hedge 500,000
Dec 17 Sold 10,000 shares at P75 per share
Share premium – ordinary
What total amount should be recognized as share
In excess of par 5,000,000
premium on December 31, 2014? From sale of treasury 1,000,000
a. 1,830,000 c. 2,390,000 Preference share capital,
b. 1,850,000 d. 2,370,000 P25 par value 5,000,000
33. Cay Company was organized on January 1, 2014 at Retained earnings 6,500,000
which date is issued 100,000 ordinary shares of P10 Treasury ordinary shares
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 - 20,000 at cost 1,500,000  Net income for the year, P300,000
35,000,000 35,000,000 What is the total shareholders’ equity on December
31, 2013?
The dividend on cumulative preference share capital a. 6,251,000 c. 6,551,000
is 10%. The preference share has a liquidation value b. 6,350,000 d. 6,556,000
of P50.
What amount should be reported as shareholders’ 41. During the current year, Macbeth Company issued
equity? (806) 10,000 ordinary shares with P200 par value and
a. 22,000,000 c. 21,700,000 20,000 convertible preference shares with P200 par
b. 21,500,000 d. 23,500,000 value for a total of P8,000,000. On the date of
issuance, the ordinary share is selling at P360 and
36. During the current year, Line Company received a
the preference share is selling at P270. What amount
donation of 2,000 shares with P50 par value from a
of the proceeds should be allocated to the
shareholder. On that date, the share market value
convertible preference shares? (5818)
was P350. The shares were originally issued for P250 a. 6,000,000 c. 4,800,000
per share. What is the decrease in shareholders’ b. 5,400,000 d. 4,400,000
equity as a result of the donation? (294) 42. During the current year, Ghielyn Company issued 6%
a. 700,000 b. 500,000 c. 200,000 d. 0 bonds with a maturity value of P6,000,000, together
with 10,000 ordinary shares with P50 par value for a
37. Day company held 10,000 shares of P10 par value as
combined cash amount of P11,000,000. The market
treasury reacquired in 2012 for P120,000. On
value of the ordinary share cannot be determined. If
December 31, 2013, the entity reissued all 10,000
the bonds were issued separately, the bonds would
shares for P190,000. Under the cost method of
have sold for P4,000,000 on an 8% yield to maturity
accounting for treasury shares, what is credited for

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basis. What amount should be reported for share

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the excess of the reissue price over the cost of
premium on the issuance of the ordinary shares?
treasury shares? (296)

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(5818)
a. Share capital of P100,000 eH w a.7,500,000 c. 5,500,000
b. Retained Earnings of P70,000
b. 6,500,000 d. 4,500,000

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c. Gain on sale of investment of P70,000
43. During the current year, Myka Company issued
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d. Share premium of P70,000
50,000 convertible preference shares with P100 par
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38. Dayron Company had 80,000 ordinary shares

outstanding in January 2013. The entity distributed a value for P110 per share. One preference share can
15% stock dividend in March and a 10% stock be converted into three ordinary shares with P25 par
value at the option of the preference shareholder. At
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dividend in June. After acquiring 10,000 shares of

treasury in July, the entity split the share 4 for 1 in year-end, when the market value of the ordinary
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December. How many ordinary shares are share was P40 per share, all of the preference shares
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outstanding on December 31, 2013? (302) were converted. What amount should be credited
a. 364,800 b. 488,000 c. 498,000 d. 451,500 respectively to ordinary share capital and share
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39. Rudd Company had 700,000 ordinary shares premium as a result of the conversion? (5818)
a. 3,750,000 and 1,750,000
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authorized and 300,000 shares outstanding on

January 1, 2013 b. 3,750,000 and 2,250,000
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Jan 31 Declared 10% stock dividends c. 5,000,000 and 500,000

June 30 Purchased 100,000 shares d. 6,000,000 and 0
Aug 1 Reissued 50,000 shares 44. Juvy Company acquired 60,000 shares with P10 par
Nov 30 Declared 2-for-1 split value at P30 per share. During the current year, the
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On December 31, 2013, how many ordinary shares entity issued 30,000 of these shares at P50 per
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outstanding? (302) share. The cost method is used in accounting for

a. 560,000 b. 600,000 c. 630,000 d. 660,000 treasury shares. What accounts and amounts should
40. Kalinga Company reported the following be credited to record the issuance of the 30,000
shareholders’ equity on January 1, 2013: shares? (5818)
sh

Preference share capital, a. Share Capital P300,000, share premium P600,000,

100,000 shares, P10 par 1,000,000 and Retained earnings P600,000
Ordinary share capital, b. Share capital P300,000 and share premium
500,000 shares, P10 par 5,000,000
P1,200,000
Share premium – preference 50,000
c. Treasury Shares P900,000 and share premium
Share premium – ordinary 200,000
Retained earnings 100,000 P600,000
During the current year, the following transactions d. Treasury Shares P900,000 and retained earnings
were completed: P600,000
 Retirement of 5,000 preference shares at P11 45. Robelle Company was organized on January 1, 2014
per share with 100,000 shares authorized with P100 par value.
 Purchase of 5,000 ordinary shares of treasury On the same date, the entity issued 75,000 shares at
at P12 per share P140 per share and on December 31, 2014, it
 Reissue of 2,000 shares of treasury at P8 per purchased 5,000 shares at P110 per share to be held
share as treasury. The entity used the par value method of
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 recording treasury shares. what is the balance in the Dec 1 – The entity purchased 5,000 of its own shares
share premium account arising from treasury share to discourage an unfriendly takeover. These shares
transaction on December 31, 2014? (5818) were not retired.
a. 200,000 c. 50,000 On December 31, 2014, how many share were
b. 150,000 d. 0 outstanding? (5842)
46. On December 31, 2014, Jennica Compnay canceled a. 375,000 c. 334,000
5,000 shares of P50 par value held in treasury at an b. 360,000 d.324,000
average cost of P120 per share. Before recording the 51. Julienne Company reported the following
cancelation of the treasury shares, the entity had the shareholders’ equity on January 1, 2014:
following shareholders’ equity: Share capital, P10 par, outstanding
Share Capital 225,000 shares for P270,000 2,250,000
(50,000 shares originally issued at P75) 2,500,000 Share premium 900,000
Share premium 1,250,000 Retained earnings 2,190,000
Retained earnings 1,000,000 During the current year, the entity had the following
Treasury shares, at cost 600,000 share transactions:
On December 31, 2014, what amount should be  Acquired 6,000 treasury shares for P270,000
reported as share capital outstanding? (5818)  Sold 3,600 treasury shares at P50 a share
a. 2,500,000 c. 2,250,000  Sold the remaining treasury shares at P41 per
b 1,900,000 d. 2,125,000 share
47. Sally Company had issued 100,000 ordinary shares.
Of these, 5,000 shares were held as treasury on What is the total amount of share premium on
January 1, 2014. During the current year, December 31, 2014? (5842)
transactions involving ordinary shares were as
a. 891,600 c. 908,400
follows:
b. 870,000 d. 927,600

m
May 1 1,000 shares of treasury were sold.

er as
52. On January 1, 2014, Lourdes Company granted share
Aug 1 10,000 previously unissued shares were
options to certain key employees as additional

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sold. eH w
Nov 1 A 2-for-1 share split took effect compensation. The options were for 100,000
On December 31, 2014, how many ordinary shares Ordinary shares of P10 par value at an option price

o.
of P15 per share. Market price of this share option
rs e
were issued and outstanding, respectively? (5818)
a. 220,000 and 212,000 c. 222,000 and 214,000 on January 1, 2014 is P8. The options were
ou urc

b. 220,000 and 216,000 d. 222,000 and 218,000 exercisable beginning January 1, 2014 and expire on
48. Jasmine Company was organized on January 1, 2014. December 31, 2014. On April 1, 2014, when the
On that date, the entity issued 200,000 shares with share was trading at P21, all share options were
o

P10 par value at P15 per share. During the period exercised. What amount of compensation expense
aC s

January 1, 2014 through December 31, 2015, the should be reported in 2014 in connection with the
vi re

entity reported net income P2,000,000 and paid cash options? (5842)
dividends of P500,000. On January 5, 2015, the a. 800,000 b. 500,000 c. 200,000 d. 125,000
y

entity purchased 10,000 shares at P20 per share to 53. Azalea Company granted 30,000 share appreciation
be held as treasury. On December 31, 2015, 5,000 rights that enabled key employees to receive cash
ed d

treasury shares were sold at P30 per share and the equal to the difference between P50 and the market
ar stu

remaining treasury shares were retired. What is the price of the share on the date each right is exercised.
total shareholders’ equity on December 31, 2015? The service period is 2014 through 2016, and the
(5818) rights are exercisable in 2017. The market price of
is

a. 4,450,000 c. 4,400,000 the share was P60 and P80 on December 31, 2014
b. 4,350,000 d. 4,950,000 and 2015, respectively. What amount should be
Th

49. Guadalyn Company Issued 10,000 shares with P100 reported as the liability under the share appreciation
par to a lawyer as compensation for 1,000 hours of rights on December 31, 2015? (5842)
legal services performed. The lawyer usually bills a. 600,000 c. 100,000
P1,600 per hour for legal services. On the date of b. 500,000 d. 450,000
sh

issuance, the share was trading on a public exchange 54. Katrina Company reported shareholders’ equity on
at P140. By what amount should the share premium December 31, 2014 which consisted of the following:
account increase as a result of the transaction? Share capital P30 par, 100,000 shares issued and
(5842) outstanding 3,000,000
a. 600,000 c. 300,000 Share premium 1,500,000
b. 400,000 d. 0 Retained earnings (deficit) (2,100,000)
50. On January 1, 2014, Akiko Company had 125,000
shares issued, 25,000 shares of which were held as On January 2, 2015, the entity put into effect quasi-
treasury. During the current year, transactions were reorganization by reducing the par value of the share
as follows: to P5 and eliminating the deficit against share
Jan 1 through Oct 31 – 13,000 treasury shares were premium. Immediately after the reorganization, what
distributed to the officers as part of the share amount should be reported as share premium?
compensation plan. (5842)
Nov 1 – A 3 for 1 share split took effect. a. 4,000,000 c. 1,900,000
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 b. 1,500,000 d. 400,000
55. Geneva Company had the following capital structure
during 2013 and 2014:
Preference Share capital, P10 par, 4% cumulative,
250,000 shares 2,500,000
Ordinary share capital, P50 par,
200,000 shares 10,000,000

The entity reported net income of P5,000,000 for

the year ended December 31, 2014. The entity paid
no preference dividends during 2013 and paid
P160,000 in preference dividends during 2014. What
amount should be reported as basic earnings per
share? (5842)
a. 24.20 b. 24.50 c. 24.00 d. 25.00
56. Norraine Company had 1,200,000 ordinary shares
outstanding on January 1 and December 31, 2014. In
connection with the acquisition of a subsidiary in
June 2013, the entity is required to issue 50,000
additional ordinary shares on July 1, 2015 to the
former owners of the subsidiary. The entity paid
P200,000 preference dividend in 2014 and reported
net income of P3,400,000 for the year. What amount

m
should be reported as diluted earnings per share for

er as
the current year? (5842)

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a. 2.83 b. 2.72 c. 2.67 d. 2.56
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57. Josephine Company provided the following
information on December 31, 2014:

o.
Preference share capital,
rs e
P100 par, 8% 500,000
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Ordinary share capital, P100 par 1,100,000

Retained earnings 460,000
Treasury ordinary shares 150,000
o

– 1,000 shares at cost

aC s

The preference shares are cumulative and dividends

vi re

are in arrears for two years. What is the book value

per ordinary share? (5842)
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a. 125 b. 191 c. 133 d. 141

ed d
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is
Th
sh

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