PROBLEM 21-1

Requirement 1

1 Treasury shares 800,000

Cash 800,000

2 Cash 1,000,000
Treasury shares 800,000
Share premium 200,000

Cash 700,000
Retained earnings 100,000
Treasury shares 800,000

Requirement 2

Ordinary share capital 500,000

Share premium (5,000 x 4) 20,000
Retained earnings 280,000
Treasury share 800,000

PROBLEM 21-2

Requirement 1

1 Cash 4,000,000
Share capital (200,000 x 15) 3,000,000
Share premium 1,000,000

2 Cash 6,250,000
Share capital (250,000 x 15) 3,750,000
Share premium 2,500,000

3 Treasury shares 1,000,000

Cash 1,000,000

4 Cash 1,250,000
Treasury shares 1,000,000
Share premium 250,000

Requirement 2

1 Cash 4,000,000
Share capital (200,000 x 20) 4,000,000

2 Cash 6,250,000
Share capital (250,000x 20) 5,000,000
Share premium 1,250,000

3 Treasury shares 1,000,000

Cash 1,000,000
 4 Cash 1,250,000
Treasury shares 1,000,000
Share premium 250,000

PROBLEM 21-3

1 Cash 4,200,000
Preference share capital 3,000,000
Share premium- PS 1,200,000

2 Cash 5,500,000
Ordinary share capital 5,000,000
Share premium-ordinary share 500,000

3 Preference share (10,000 x 100) 1,000,000

Share premium- PS 400,000
Cash (10,000 x 120) 1,200,000
Share premium -retirement 200,000

4 Treasury sharcs (15,000 x 52) 780,000

Cash 780,000

Cash (10,000 x 60) 600,000

Treasury shares (10,000 x 52) 520,000
Share premium treasury share 80,000

Received 20,000 ordinary shares as donation from shareholders.

Cash (10,000 x 65) 650,000

Donated capital 650,000

Profit and loss 3,000,000

Retained earmings 3,000,000

Retained earmings 260,000

Retained eamings appropriated for treasury shares
260,000

Shareholders' Equity
Preference share capital, 12% P100 par 2,000,000

Ordinary share capital, P50, 100,000 shares issued, of which

5,000 shares are in treasury and 10,000 shares are donated
5,000,000
Share premium:
Preference share 800,000
Retirement of preference share 200,000
Ordinary share 500,000
Treasury share 80,000
Donated capital 650,000 2,230,000
Retained carnings:
Unappropriated 2,740,000
Appropriated for treasury shares 260,000 3,000,000
Treasury shares, at cost (260,000)
 Shareholders' equity 11,970,000

PROBLEM 21-4

1 Share capital 3,000,000

Share premium 200,000
Share capital (40,000 x 50) 2,000,000
Share premium -recapitalization 1,200,000

Memo Issued 100,000 new shares with par of P30 as a result of 5

for I split of 20,000 original shares with par of PI50,

3 Share capital (20,000 x 50)) 1,000,000

Share premium recapitalization 1,000,000

4 Share capital 3,000,000

Share premum 200,000
Retained eamings 800,000
Share capital (80,000 x 50) 4,000,000

PROBLEM 21-5

Requirement 1

1 Cash 1,000,000
Ordinary share capital 1,000,000

2 Treasury shares 300,000

Cash 300,000

Memo-Issued 140,000 new ordinary shares with par of P25 as a

result ofa 2 for I split of 70,000 original shares with a par of
PI50.
3

4 Cash 120,000
Treasury shares (3,000/ 10,000 x 300,00o) 90,000
Share premium- treasury shares 30,000

Memo- Received 15,00 ordinary shares by way of donation.

5

Cash (10,000 x 40) 400,000

Donatcd capital 400,000

Profit and loss 500,000

Retained eanings 500,000

Retained earmings 210,000

Retained eamings appropriated for treasury shares 210,000

Shareholders' Equity
 Preference share capital 500,000
Ordinary share capital 3,500,000
Share premium:
Preference share 200,000
Ordinary share 500,000
Treasury share 30,000
Donated capital 400,000 1,130,000
Retained earnings:
Unappropriated 2,290,000
Appropriated for treasury shares 210,000 2,500,000
Treasury shares, at cost (210,000)
Shareholders cquity 7,420,000

PROBLEM 21-6

1 Share capital 500,000

Donated capital (5,000,000 x 10) 500,000

Donated capital 500,000

Retained eamings 500,000

2 Share capital (50,000 x 50) 2,500,000

Share premium 2,500,000

Share premium 500,000

Retained earnings 500,000

3 Share capital 5,000,000

Share premum 1,000,000
Share capital (100,000 x 55) 5,500,000
Retained eamings 500,000

4 Share capital 5,000,000

Share premum 1,000,000
Share capital (150,000x 20) 3,000,000
Share premium recapitalization 3,000,000

Share premium- recapitalization 500,000

Retained earnings 500,000

PROBLEM 21-7

Cash (4,000 x 60) 240,000

Ordinary share capital (20,.000 rights/5-4,000 shares)
200,000
Share premium 40,000

Sales price 2,500,000

Less: Market value of warrants (20,000 x 10) 20,000
Issue price of preference shares 2,300,000

Cash 2,500,000
 Preference share capital 2,000,000
Share premium- PS 300,000
Share warrants outstanding 200,000

Cash (9,000 x 60) 540,000

Share warrants outstanding (18,000/ 20,000 x 200,000)
180,000
Ordinary share capital 450,000
Share premium-ordinary shares 270,000

Share warrants outstanding 20,000

Share premium-unexercised warrants 20,000

Market value of ordinary share 80

Less: Option price 60
Excess 20
Multiply by 25,000
Value of warrants 500,000

Cash 6,000,000
Preference share capital 5,000,000
Share premium PS 500,000
Share warrants outstanding 500,000

Cash (25,000 x 60) 1,500,000

Share warrants outstanding 500,000
Ordinary share capital (25,000 x 50) 1,250,000
Share premium -ordinary share 750,000

PROBLEM 21-8
2020
MAY 31 Cash 6,000,000
Bonds payable 5,000,000
Premium on bonds payable 250,000
Share warants outstanding 750,000

Sales price of bonds with warrants 6,000,000

Less: Market value of bonds ex-warrants 5,250,000
Issue price of warrants 750,000

DEC 31 Cash (10,000 x 120) 1,200,000

Share warrants outstanding (10,000/ 15,000 x 750,000) 500,000
Ordinary share capital (10,000 x 100) 1,000,000
Share premium 700,000

31 Profit and loss 2,000,000

Retained earnings 2,000,000
2021
Memo-Issued 60,000 rights permitting shareholders to acquire
JULY 15 I share at PI30 for every 5 rights.

DEC 31 Cash (60,000/5-12,000 x 130) 1,560,000

Ordinary share capital (12,000 x 100) 1,200,000
 Share premium - issuance 360,000

31 Share warrants outstanding 250,000

Share premium unexcercised share warrants 250,000

31 Profit and loss 3,000,000

Retained earnings 3,000,000

Shareholders' Equity 12/31/2021

Ordinary share capital, PI00 par

Authorized-200,000 shares
Issued and outstanding-72,000 shares 7,200,000
Share premium 2,310,000
Retained carnings 8,000,000
Shareholdes' equity 17,510,000

PROBLEM 21-9 ANSWER (A)

Issuance (200,000 x 15) 3,000,000

Net income 750,000
Cash dividends (380,000)
Treasury shares (12,000 x 12) (144,000)
Reissue of treasury (8,000 x 8) 64,000
Retirement of treasury-no effect -
3,290,000
PROBLEM 21-10 ANSWER ©

Per book 980,000

Treasury shares:
1,000 x 28 (28,000)
900 x 30 (27,000)
Reissuance of treasury (1,500 x 32) 48,000
Net income 110,000
1,083,000
PROBLEM 21-13 ANSWER (C)

10 X 5 50

PROBLEM 21-14 ANSWER (D)

Total ordinary shares issued (200,000+100,000) 300,000

Less: Treasury ordinary shares 75,000
Ordinary shares outstanding 225,000

PROBLEM 21-15 ANSWER (A)

Issued (80,000 x 2) 160,000

Treasury (10,000 x 2) (20,000)
Outstanding 140,000
 PROBLEM 21-16 ANSWER (A)

Issued shares (125,000 x 3) 375,000

Less:
Old treasury shares (12,000 balance x 3) 36,000
New treasury shares 5,000 41,000
Outstanding 334,000

PROBLEM 21-17 ANSWER (A)

Original shares issued 100,000

New shares issued 10,000
Total shares issued before split 110,000

Shares issucd after split (110,000 x 2) 220,000

Treasury shares after split (4,000 x 2) (8,000)
Outstanding ordinary shares 212,000

PROBLEM 21-18 ANSWER (C)

Share capital (2,000 x 10) 20,000

Share premium (2,000 x 90) 180,000
Retained eamings (balancing) 100,000
Cash 300,000

PROBLEM 21-19 ANSWER (B)

Share capital (20,000 x 20) 400,000

Share premium (20,000x 6) 120,000
Cash (20,000 x 24) 480,000
Share premium treasury (20,000 x 2) 40,000

PROBLEM 21-20 ANSWER (B)

Treasury shares (5,000 x 100) 500,000

Share premium- issuance (5,000 x 40) 200,000
Cash (5,000 x 110) 550,000
Share premium-treasury (balancing) 150,000

PROBLEM 21-21 ANSWER (B)

Journal entry for retirement:

Share capital (5,000 x 50) 250,000
Share premium 5,000x 25) 125,000
Retained earnings (balancing) 225,000
Treasury shares 600,000

QUESTION 1- A
 -2,500,000,250,000 2,250,000

QUESTION 2- B

(1.250,000 125,000) 1,125,000

QUESTION 3- C

(1.000,000-225,000) 775,000

PROBLEM 21-22 ANSWER (B)

Journal entries:

1 Treasury shares
Cash

2 Cash (5,000 x 60)

Treasury shares (5,000 x 50)
Share premium- TS

3 Cash (2,000 x 45)

Share premium- TS
Treasury shares (2,000 x 50)

QUESTION 1- C
QUESTION 2- A
QUESTION 3- A

Share capital 2,250,000

Share premium 1,540,000
Retained earnings 2,000,000
Total 5,790,000
Treasury shares (3,000 x 50) (150,000)
Shareholders' equity 5,640,000

PROBLEM 21-23

QUESTION 1- A SHARE CAPITAL 1,500,000

QUESTION 2- A SHARE PREMIUM 800,000
QUESTION 3- A TOTAL SHAREHOLDERS EQUITY 2,800,000
QUESTION 4- A CONTRIBUTED CAPITAL 3,300,000

PROBLEM 21-25

SHARE SHARE
SHARES CAPITAL PREMIUM
1-Jan 30,000 3,000,000 1,500,000
 1-Feb 2,000 200,000 50,000
15-Mar (5,000) - -
31-Oct - - 1,100,000
5-Nov
(32,000 X 2) 64,000
(5,000 X 2) (10,000)
20,000 1,000,000 500,000
15-Dec - - -
31-Dec 74,000 4,200,000 3,150,000

Issue price of bonds (5,000,000 x 120) 6,000,000

Market price of bonds without conversion feature (5,000,000 x 98) 4,900,000
Share premium-conversion feature 1,100,000

PROBLEM 21-26
1A
2A
3B
4C
5C
6D
7A
8C
9D
10 C
PROBLEM 21-27
1C
2B
3B
4C
5D
PROBLEM 21-28
1B
2C
3C
4C
5C
6D
7B
8A
SHARE-
HOLDERS
EQUITY
4,500,000
 250,000
(600,000)
1,100,000

1,500,000
2,000,000
8,750,000