The following data were compiled prior to preparing the balance sheet of the Conviction Corporation as of
December 31, 2015:
Authorized common stock, P100 par value P4,000,000
Cash dividends payable 160,000
Donated capital 800,000
Gain on sale of treasury stock 80,000
Net unrealized loss on available for sale securities 96,000
Premium on capital stock 320,000
Premium on bonds payable 240,000
Reserve for bond sinking fund 400,000
Reserve for depreciation 600,000
Revaluation increment on property 800,000
Retained earnings, unappropriated 720,000
Subscribe capital stock 480,000
Stock subscriptions receivables 120,000
Stock warrants outstanding 200,000
Treasury stock, at cost 144,000
Unissued common stock 800,000


Compute for the following:
1. Common stock issued 4,000,000 3,200,000 3,056,000 3,680,000
2. Additional paid-in capital (APIC) 320,000 1,400,000 1,320,000 1,200,000
3. Appropriated retained earnings 400,000 544,000 1,000,000 -
4. Total stockholders’ equity 6,760,000 6,640,000 6,480,000 6,240,000
5. Legal capital 3,200,000 3,680,000 3,560,000 4,000,000

The stockholders’ equity section of the Determination Inc. showed the following data on December 31, 2014:
Common stock, P3 par, 450,000 shares authorized, 375,000 shares issued and outstanding, P1,125,000; Paid-
in capital in excess of par, P10,575,000;
Additional paid-in capital from stock options, P225,000; Retained earnings, P720,000. The stock options were
granted to key executives and provided them the right to acquire 45,000 shares of common stock at P35 per
share. Each option has a fair value of P5 at the time the options were granted.

The following transactions occurred during 2015:
Feb. 1 Key executives exercised 6,750 options outstanding at December 31,
2014. The market price per share was P44 at this time.

Apr. 1 The company issued bonds of P3,000,000 at par, giving each P1,000 bond a detachable warrant
enabling the holder to purchase two shares of stock at P40 each for a 1-year period. The
bonds would sell at P996 per P1,000 bond without the warrant.

July 1 The company issued rights to stockholders (one right on each share, exercisable within a 30- day
period) permitting holders to acquire one share at P40 with every 10 rights submitted. All but
9,000 rights were exercised on July 31, and the additional stock was issued.
Oct. 1 All warrants issued in connection with the bonds on April 1 were exercised.

Dec. 1 The market price per share dropped to P33 and options came due.
Because the market price was below the option price, no remaining options were
Dec. 31 Net income for 2015 was P375,750.


Capital stock 5.012. APIC 1.000 Income Summary 12/31/05 J P26. the following resolutions were extracted: • 01/02/05 – authorized the issuance of 50.000 275.000 d. P1. payable January 31. Prepare adjusting entries as of December 31.000.000 1. to stockholders on record as of January 15. A B C D 1. P12.095.500 9. • 12/01/05 – authorized the re-issuance of 2.500 3.000 12/31/05 J P30. 2015. Retained earnings a.000. REQUIRED: 1.287.000 b. 2015 was P130 per share.995. P870. Common stock a.329.676. Total additional paid-in capital a.000 5.545.000 965.000 shares • Par value per share – P100 From the board of directors’ minutes of meetings.512. The market value of the stock on December 29. determine the following as of December 31. 2015: 1. • 12/29/05 – Declared a 10% stock dividend.500 4..000 5.000.000 12/01/05 CR P287.000 c.000.000 Retained Earnings 12/29/05 J P545. P981. Total stockholders’ equity 10.000 Based on the other working papers submitted by your audit staff.250. the following additional information was forwarded: From the Articles of Incorporation of Fortitude Company: • Authorized capital stock – 150.572.000 9.262.000 shares at P120 per share. P14.175 b. your firm was engaged in the audit of the Fortitude Company at the close of the company’s first year of operations on December 31.500 12/31/05 J 4.973. determine the adjusted balances of the following as of December 31. Based on the above and the result of your audit.000.475.Based on the above and the result of your audit.200 3.000 shares at P110 per share. P13. 2016.000. • 08/30/05 – authorized the acquisition of 5. The company closed its books prior to the time you began your year-end fieldwork.500 PROBLEM NO.000.000 5. Total retained earnings 3. P1.165.000 550.500 1.000 01/02/05 CR P6.500 treasury shares at P115 per share.000 2.000.475 d.382. as Managing Partner of the Sy Pee Ey & Co.500 9.000 3.525.775 c.000 3.283. 2015. Total stockholders’ equity a.225 4. P11. P14. P1. 3 With your representation.604.075 d. Treasury stock 250. Your audit and review showed the following stockholders’ equity accounts in the general ledger: Common Stock 08/30/05 CD P550.000 PROBLEM NO.300 c. 2015.050 2.155.000 12/29/05 J 545.273.275.750 c.000 d.000 12/31/05 J 4.012. P12.950 b.000 - 5. 4 The Retained Earnings account of Endurance Company shows the following debits and credits for the year 2015: .215. P15. P1.629. P12. 2016. P1.500 3. 2.750 b. P1.737.545.

PROBLEM NO. P100 par value. issued and outstanding.720 (k) Gain on early retirement of bonds 15. issued and outstanding 900.300 480.270 (m) Correction of a fundamental error 50.000 shares.150 (b) Write-off of goodwill 52. 600 shares 400.700.320 (o) Dividends payable 25.000 Common stock. P100 par value (liquidation value.350 (e) Officers’ compensation related to income of prior periods – accrual overlooked 325.000 shares. PROBLEM NO.500 668.850 (f) Loss on retirement of preferred shares at more than issue price 70.000 Premium on preferred stock 150. 2014: Common stock.850 (g) Paid in capital in excess of par 129.000 shares. authorized.320 (r) Appraisal increase in land 250.320 (s) Appropriated for property acquisition 100.250 721.500 214. 2015.000 Reserve for bond retirement 320.470 212.000 shares.350 (i) Stock subscription defaults 8. 6. P10 par value.650 (c) Stock dividends distributed 140.320 REQUIRED: 1.320 (p) Loss on sale of treasury stock 20.320 (q) Proceeds from sale of donated stock 40.000 Retained earnings 458. 2. P115 per share).320 (n) Effect of change in accounting principle from FIFO to weighted average 100. Determine the correct amount of Retained Earnings account. 6 Following is the stockholders’ equity section of Tenacity Corporation’s balance sheet at December 31.500.000 559.050 253.000 shares 800. the Liability side of the Balance Sheet shows following items: Current liabilities P571.000 84. 4. Authorized.500 154. 8.000.000 Transactions during 2015 and other information relating to the stockholders’ equity accounts were as follows: .000 414. issued.900 238.000 Bonds payable 600.650 (d) Loss on sale of equipment 48. at cost 84.000 Retained earnings 2.000 409.000 6% Cumulative preferred stock.000 659.000 Total stockholders’ equity P12. RETAINED EARNINGS Balance Date Debit Credit Debit Credit Jan. 1 Balance 726.000 Additional paid-in capital 750.000 369.000 389.000 shares P9. 2015. 5 In connection with your audit of the balance sheet of the Guts Company on December 31.000 528.770 (l) Gain on life insurance policy settlement 10.400 (a) Loss from fire 5.820 (j) Gain on retirement of preferred stock at less than issue price 25. Prepare adjusting journal entries to correct the Retained Earnings account.000 204. in treasury.600 Treasury preferred stock.350 (h) Stock issuance expenses (related to letter g) 10.000 Premium on common stock 165.050 314.500 264. authorized 1. 20.000 REQUIRED: Compute for the total stockholders’ equity as of December 31.450.

000 2. 2015.425. was carried by the previous owner at a book value of P300. Unapproriated retained earnings a. P2. • On December 5. P14.065.500 c. P16. 60. • On June 1. Common stock a. • On November 2. Additional paid-in capital a. 150. Tenacity reacquired 75.000. It originally cost P600.095. • On August 15.275. • On September 30. Tenacity sold 45.050.800.000 stock rights were exercised when the market value of the stock was P12.300. P2.• On January 26. P16.000. P12. P1. • Net income for 2015 was P720.190.000 c.000 d.50 per share.220.000 d. payable on July 15. 2015: 1.485.000 b.000 d. Total stockholders’ equity a.000 4. 2015 to stockholders of record on July 1.000 c. Tenacity declared a two for one stock split-up and charged the par value of the stock from P10 to P5 per share. P12. P1. The rights expire on October 31.000 d.000 shares of its common stock for P11 per share.422. each stockholder was issued one stock right for each share held to purchase two additional shares of stock for P12 per share.575. determine the following as of December 31. and was recently appraised at P390. P10. On November 20. P10.550. QUESTIONS: Based on the above and the result of your audit.000 shares of its treasury stock for P14 per share.000 b.000 b. P1.000. shares were issued for the stock split. Tenacity declared a cash dividend of P1 per share.600.295.000 b. P2.000 c.000 . • On April 4.000.000 3. P3.000 shares were issued in exchange for a secondhand equipment. 2015. P2.825. P16.