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CORPORATION Handout With Answer Key
CORPORATION Handout With Answer Key
A. On April 1, 2019, KMJS Corporation, a newly formed company, had the following shares issued and
outstanding.
Ordinary share, P20 par (20,000 shares originally issued for P60 per share)
Preference share, P50 par (6,000 shares originally issued for P100 per share)
1. On April 1, 2019, KMJS Company should report Ordinary Share Capital / Preference Share Capital / and
Share Premium, respectively of
a. P400,000/P300,000/P1,100,000
b. P1,200,000/P300,000/P300,000
c. P400,000/P600,000/P800,000
d. P1,200,000/P600,000/P0
The credit balance in income summary account has not yet been closed to retained earnings.
a. P14,100,000 c. P11,900,000
b. P13,400,000 d. P11,200,000
C. The capital structure of Junel Company at December 31,2019 follows:
12% Preference share capital, P200 par, 15,000 shares issued and outstanding P3,000,000
Ordinary share capital, P30 par, 250,000 shares issued and outstanding 7,500,000
Share Premium-preference 900,000
Share Premium-ordinary 750,000
Retained Earnings 2,100,000
The following selected transactions relating to shareholder’s equity were noted in 2019:
a. P18,000 c. P15,000
b. P17,000 d. P13,000
4. How many ordinary shares are issued and outstanding, respectively at December 31,2019?
a. P14,250,000 c. P14,453,500
b. P14,435,500 d. P14,500,000
D. The shareholder’s equity of Michael Company revealed the following on June 30, 2019:
a. P1,305,000 c. P760,000
b. P1,115,000 d. P755,000
E. Of the 125,000 ordinary shares issued by Peppa Company, 25,000 were held as treasury shares on December
31,2018. During 2019, transactions involving Peppa’s ordinary shares were as follows:
January 1 through October 31- 13,000 treasury shares were distributed to officers as part of share compensation
plan.
November 1- A 3-for-1 share split took effect.
December 1- Peppa purchased 5,000 of its own shares to discourage an unfriendly takeover. These shares were
not retired.
8. At December 31, 2019, how many shares of Peppa’ Company’s ordinary share capital were issued?
9. Use the same information given in No. 9. How many shares of Peppa Company ordinary share capital were
outstanding?
F. Mary Co. Had outstanding 20,000 shares of P100 par value 8% cumulative preference share capital and
30,000 shares of P50 par value ordinary share capital on December 31,2019. At December 31,2019, dividends
in arrears on the preference shares were P80,000. Cash dividends declared in 2019 totaled P300,000.
10. The amounts paid to preference shareholders and ordinary shareholders are
G. At December 31, 2018 and 2019, Shania Company had outstanding 4,000 shares of P100 par value 12%
cumulative, fully participating preference share and 20,000 of P10 par value ordinary share. At December
31,2018, dividends in arrears on the preference shares were P24,000. Cash dividends declared in 2019 totaled
P108,000.
11. What are the amounts of dividend per share on the preference and ordinary shares, respectively?
H. On December 31,2019, Renzo Company was registered at the Securities and Exchange Commission with
100,000 authorized ordinary share of P100 par value. On the same date, 40,000 shares were sold and issued at
P105 per share. On May 14, 2019, the corporation purchased 600 shares of its ordinary shares capital at P110
per share. On September 15,2019, 400 treasury shares were sold at P95. During 2015, the corporation realized a
profit after tax of P830,000 and paid a cash dividend of P200,000.
a. P10,602,000 c. P4,802,000
b. P4,820,000 d. P4,352,000
I. Cage company had 80,000 ordinary shares outstanding in January 2016. The company distributed a 15%
share bonus in March. After acquiring 10,000 shares in november, the company split its shares 1-for-4 in
December.
13. How many ordinary shares are outstanding as of December 31, 2016.
a. 328,000 c. 20,500
b. 23,000 d. 13,000
J. Dayton Company had 8,000 ordinary shares outstanding in January 2016. The company distributed a 15%
bonus issue in March and another 10% bonus issue in June. On July 31, 2016, the company reacquired 2,000
treasury shares. On October 15, it split on a 3-for-1 basis.
14. How many ordinary shares are outstanding as of December 31, 2016?
a. 30,360 c. 10,120
b. 24,360 d. 8,120
L.. At December 31, 2015, Travolta Company hand 20,000 shares of P20 par value treasury shares that were acquired in 2015 at
P24 per share. In May 2016, Travolta issued 15,000 of these treasury shares at P20 each. The cost method is used the treasury share
transactions.
16. At December 31, 2016, what amount should Travolta show in notes to financial statements as a restriction of Retained earnings?
a. P10,000 c. P120,000
b. P100,000 d. P180,000
M. The Power Company had 100,000 of 15 par value ordinary shares on January 1, 2016. During 2016, the following transactions
pertaining to its ordinary shares occurred:
17. . What is the total cost of the remaining treasury shares at the end of 2016?
a. P120,000 c. P60,000
b. P108,000 d. P0
O. On July 1, 2015, Crafters, Inc. has 200,000 ordinary shares outstanding with par value of P10 per share and market value of P12
per share. On the same date, Crafters declared a 1-for 2 reverse share split. The par value of the share was increased from P10 to
P20 and one new P20 par value share was issued for every two P10 par outstanding. Immediately before the 1-for-2 reverse share
split, Crafters’ share premium account balance was P450,000.
18. What should be the balance in Crafter’s share premium account immediately after the reverse share split is effected?
a. P900,000 c. P650,000
b. P225,000 d. P450,000