Bcacctg2 - Accounting For Partnership and Corporation: Exercise 4 Shareholders' Equity

BCACCTG2 – ACCOUNTING FOR PARTNERSHIP
AND CORPORATION
Exercise 4
SHAREHOLDERS’ EQUITY
1. Mara Company provided the following data at year-end:

Authorized share capital 5,000,000
Unissued share capital 2,000,000
Subscribed share capital 1,000,000
Subscription receivable 400,000
Share premium 600,000
Retained earnings unappropriated 600,000
Retained earnings appropriated 300,000
Revaluation surplus 200,000
Treasury shares, at cost 150,000
What total amount should be reported as shareholders’ equity?
2. Glenn Company provided the following information at year-end:

Preference share capital, P100 par 2,310,000
Share premium - preference share 805,000
Ordinary share capital, P10 par 5,255,000
Share premium - ordinary share 2,750,000
Subscribed ordinary share capital 500,000
Retained earnings 1,900,000
Notes payable 4,000,000
Subscription receivable - ordinary share 400,000
Revaluation surplus 100,000
What is the amount of legal capital?
3. East Company issued 1,200 shares with P15 par to Howe as compensation for 1,000
hours of legal services performed.
Howe usually bills P143 per hour for legal services. On the date of issuance, the shares
was trading on a public exchange at P147.
By what amount should the share premium account increase as a result of the
transaction?
4. At the beginning of the current year, Ria Company issued 10,000 ordinary shares of P20
par value and 20,000 convertible preference shares of P20 par value for a total of
P800,000.
At this date, the ordinary share was selling for 36 and the convertible preference share
was selling for P27.
What amount of the proceeds should be allocated to the preference shares?

AND CORPORATION
P900,000.
What amount of the proceeds should be allocated to the ordinary shares?
P900,000.
What is the share premium from the issuance of preference shares?
P900,000.
What is the share premium from the issuance of ordinary shares?
8. At the beginning of current year, Ashe Company was organized with authorized
capital of 100,000 shares of P200 par value.
January 10 Issued 25,100 shares at P220 a share
March 25 Issued 1,010 shares for legal services when the fair value was P240
a share
September 30 Issued 5,001 shares for a tract of land when the fair value was P260
a share
What amount should be reported as share capital?
9. At the beginning of current year, Ashe Company was organized with authorized
capital of 100,000 shares of P190 par value.
January 10 Issued 25,000 shares at P220 a share

AND CORPORATION
March 25 Issued 1,000 shares for legal services when the fair value was P240
a share
September 30 Issued 5,000 shares for a tract of land when the fair value was P260
a share
What amount should be reported for share premium?
10. Negros Company was incorporated on January 1, 2021 with the following authorized
capitalization:
Ordinary share capital, 200,000 shares, no par,
100 stated value 20,000,000
Preference share capital, 200,000 shares, 10% fixed
rate, P50 par value 10,000,000
During 2021, the entity issued 150,000 ordinary shares for a total of P18,838,000 and
50,000 preference shares at P63 per share.
In addition, on December 15, 2021, subscriptions for 20,010 preference shares were
taken at a purchase price of P101. These subscribed shares were paid for on January
15, 2022.
Net income for 2021 was P5,000,000.
What amount should be reported as total contributed capital on December 31, 2021?
11. Day Company held 10,000 shares of P10 par value as treasury reacquired for P120,001.
At year-end, the entity reissued all 10,000 shares for P190,080.
What is credited for the excess of the reissue price over the cost of treasury shares
(State the amount and account)?
12. At the beginning of current year, Hanna Company reported the following
shareholders’ equity:
Share capital, P10 par, outstanding 225,000 shares 2,250,000
Retained earnings 2,190,000
During the current year, the entity had the following share transactions:
* Acquired 6,000 treasury shares for P270,000.
* Sold 3,601 treasury shares at P51 a share.
* Sold the remaining treasury shares at P43 per share.
What is the total amount of share premium at year-end?

AND CORPORATION
13. At the beginning of current year, Rona Company issued 50,000 shares of P11 par value
for P100 per share.
During the year, the entity reacquired 2,000 shares at P155 per share and immediately
cancelled these 2,000 shares.
1.) In connection with the retirement of shares, what amount should be debited to
share premium?
2.) In connection with the retirement of shares, what amount should be debited to
retained earnings?
14. At year-end, Pack Company canceled 5,000 shares of P25 par value held in treasury at
an average cost of P130 per share.
Before recording the cancelation of the treasury shares, the entity had the following
balances:
Share capital issued originally at P30 per share 624,000
Retained earnings 900,000
Treasury shares, at cost 650,000
What is the share capital outstanding at year-end?
15. Vicar Company was organized at the beginning of current year with 100,000
authorized shares of P105 par value and issued 75,000 shares at P141 per share.
During the year, the entity purchased 5,000 shares at P112 per share. The entity used
the par value method to record the purchase of the treasury shares.
1.) What is the balance of the share premium from the original issuance of shares at
year-end?
2.) What is the balance of the share premium from treasury shares at year-end?

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BCACCTG2 – ACCOUNTING FOR PARTNERSHIP

1. Mara Company provided the following data at year-end:

What total amount should be reported as shareholders’ equity?

2. Glenn Company provided the following information at year-end:

What is the amount of legal capital?

What amount of the proceeds should be allocated to the preference shares?

What amount of the proceeds should be allocated to the ordinary shares?

What is the share premium from the issuance of preference shares?

What is the share premium from the issuance of ordinary shares?

January 10 Issued 25,100 shares at P220 a share

What amount should be reported as share capital?

January 10 Issued 25,000 shares at P220 a share

What amount should be reported for share premium?

Net income for 2021 was P5,000,000.

What is the total amount of share premium at year-end?

What is the share capital outstanding at year-end?

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