Beruflich Dokumente
Kultur Dokumente
REQUIRED:
Problem 2
Transactions during 2005 and other information relating to the stockholders’ equity accounts were as
follows:
On January 26, Tenacity reacquired 75,000 shares of its common stock for P11 per share.
On April 4, Tenacity sold 40,000 shares of its treasury stock for P14 per share.
On April 15, Tenacity sold another 15,000 of its treasury share for P9 per share.
On June 1, Tenacity declared a 1/10 share dividend, payable on July 15, 2005 to stockholders of
record on July 1, 2005. Prevailing market prices of share are as follows: June 1- P12/share, July 15-
P12.50/share, July 1- P12.75/share
On August 15, each stockholder was issued one stock right for each share held to purchase three
additional shares of stock for P12 per share. The rights expire on October 31, 2005.
On September 30, 250,000 stock rights were exercised when the market value of the stock was
P12.50 per share.
On November 2, Tenacity declared a two for one stock split-up and charged the par value of the stock
from P10 to P5 per share. On November 20, shares were issued for the stock split.
On December 5, 60,000 shares were issued in exchange for a secondhand equipment. It originally
cost P600, 000, was carried by the previous owner at a book value of P300, 000. The equipment fair
value is determined to be at P350,000 while the shares on the same day are selling for P6.50 per
share.
Net income for 2005 was P720, 000.
REQUIRED:
1. Common stock issued
2. Additional-paid-in-capital
3. Unappropriated Retained Earnings
4. Total shareholder’s Equity
Problem 3
With your representation, as Managing Partner of the Sy Pee Ey & Co., your firm was engaged in the
audit of the Fortitude Company at the close of the company’s first year of operations on December
31, 2005. The company closed its books prior to the time you began your year-end fieldwork.
Your audit and review showed the following stockholders’ equity accounts in the general ledger:
Common Stock
08/30/05 CD P550,000 01/02/05 CR P6,000,000
12/29/05 J 545,000
Retained Earnings
12/29/05 J P545,000 12/01/05 CR P287,500
12/31/05 J 4,000,000
Income Summary
12/31/05 J P26,000,000 12/31/05 J P30,000,000
12/31/05 J 4,000,000
Based on the other working papers submitted by your audit staff, the following additional information
was forwarded:
From the Articles of Incorporation of Fortitude Company:
From the board of directors’ minutes of meetings, the following resolutions were extracted:
REQUIRED:
1. Prepare adjusting entries as of December 31, 2005.
2. Based on the above and the result of your audit, determine the adjusted balances of
the following as of December 31, 2005.
Capital Stock
APIC
Total Retained Earnings
Treasury Stock
Total Shareholder’s Equity
Problem 4
Resolve Corporation began operations on January 1, 2005. The company was authorized
to issue 60,000 shares of P100 par value common stock and 120,000 shares of 10%, P100
par value convertible preferred stock.
In connection with your audit of the company’s financial statements, you noted the following
transactions involving stockholders’ equity during 2005:
Jan. 31 Issued 30,000 shares of convertible preferred stock at P150 per share.
Each share can be converted to five shares of common stock. The
corporation paid P225,000 to an agent for selling the shares.
Feb. 15 Sold 9,000 shares of common stock at P390 per share. The corporation
paid issue costs of P75,000.
May 30 Received subscriptions for 12,000 shares of common stock at P450 per
share.
Aug. 30 Issued 2,100 shares of common stock and 4,200 shares of preferred
stock in exchanged for a building with a fair market value of P1,530,000.
The building was originally purchased for P1,200,000 by the investors
and has a book value of P660,000. In addition, 1,800 shares of common
stock were sold for P720,000 cash and 2,000 share of preferred stock
were sold for 480,000 cash.
Nov. 15 Subscriptions were fully collected. Shares of stock were issued for the
fully paid subscriptions.
Dec.1 Declared a cash dividend of P10 per share on preferred stock, payable
on December 31 to stockholders of record on December 15, and P20
per share cash dividend on common stock, payable on January 15, 2006
to stockholders of record on December 15.
Dec. 31 Paid the preferred stock dividend.
1. Common Stock
2. APIC- preferred Stock
3. APIC-common stock
4. Retained Earnings
5. Total Shareholder’s Equity
Problem 5
12% preferred stock, P30 par, 135,000 shares issued and outstanding P4,050,000
Common stock, P50 par, 180,000 shares issued and outstanding 9,000,000
Premium on preferred stock 1,080,000
Premium on common stock 3,240,000
Retained earnings 1,395,000
The 2005 transactions of the company affecting its stockholders’ equity are summarized
chronologically as follows:
1. Preferred Stock
2. Common Stock
3. APIC
4. Total Retained Earnings
5. Total SHE
Problem 6
Grit Corp., organized on June 1, 2004, was authorized to issue stock as follows:
300,000 shares of preferred stock were subscribed for at P105, and 900,000 shares
of common stock were subscribed for at P26. Both subscriptions were payable 30%
upon subscription, the balance in one payment.
The second subscription payment was received, except one subscriber for 60,000
shares of common stock defaulted on payment. The full amount paid by this
subscriber was returned, and all of the fully paid stock was issued.
150,000 shares of common stock were reacquired by purchase at P28.
Reissued 90,000 treasury shares for P30.
Each share of preferred was converted into four shares of common stock.
The treasury stock was exchanged for machinery with a fair market value of
P1,500,0000
There was a 2-for-1 stock split.
Net income was P830, 000.
REQUIRED:
1. Common Stock
2. Total APIC
3. Total Contributed Capital
4. Total Shareholder’s Equity