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APC Ch10sol
APC Ch10sol
E 10-1
1.a Ordinary Share Capital (2,000 sh x P20) 40,000
Ordinary Share Premium (2,000 sh x P5) 10,000
Paid-In Capital from Retirement of OSC 20,000
Cash (2,000 sh x P15) 30,000
E 10 -2
1. Treasury Shares (5,000 sh x P20) 100,000
Cash 100,000
SHAREHOLDERS’ EQUITY
2. Contributed Capital:
Ordinary Share Capital, P25 par, 100,000 shares issued,
98,500 shares outstanding, 1,500 shares in the treasury P2,500,000
Ordinary Share Premium 1,000,000
Paid-in Capital from Sale of Treasury Shares 28,000 P3,528,000
Retained Earnings:
Retained Earnings Appropriated for Treasury Shares P 30,000
Unappropriated Retained Earnings 1,470,000 1,500,000
Total Contributed Capital and Retained Earnings P5,028,000
Less Treasury Shares, at cost - 1,500 shares 30,000
Total Shareholders’ Equity P4,998,000
E 10-3
1. Alternative 1
a. Received 5,000 Ordinary Shares as donation from a major shareholder
b. Cash 250,000
Donated Capital 250,000
APC – Chapter 10 (2007 edition) page 2
Alternative 2
a. Treasury Shares 200,000
Donated Capital 200,000
b. Cash 250,000
Treasury Share 200,000
PIC from Sale of Treasury Shares 50,000
E 10-4
1.a Preference Share Capital (2,000 sh x P50) 100,000
Preference Share Premium 50,000
PIC from Conversion of PSC into OSC 70,000
Ordinary Share Capital (2,000 sh x 4 x P10) 80,000
E 10-5
1.a Ordinary Share Capital, P25 par 500,000
Ordinary Share Capital, P5 par 500,000
E 10-6
1.a Treasury Shares 50,000
Cash 50,000
P 10 -1
1.a PSC Subscription Receivable (10,000 sh x P125) 1,250,000
OSC Subscription Receivable (20,000 sh x P60) 1,200,000
PSC Subscribed (10,000 sh x P100) 1,000,000
OSC Subscribed (20,000 sh x P50) 1,000,000
Preference Share Premium 250,000
Ordinary Share Premium 200,000
Cash 1,225,000
PSC Subscription Receivable (P1,250,000 x 50%) 625,000
OSC Subscription Receivable (1,200,000 x 50%) 600,000
b. Cash 1,225,000
PSC Subscription Receivable 625,000
OSC Subscription Receivable 600,000
Cash 137,500
2. SHAREHOLDERS’ EQUITY
Contributed Capital:
Share Capital:
10% Preference Share Capital, P100 par, 20,000 shares
authorized, 7,000 shares issued and outstanding P700,000
Ordinary Share Capital, P30 stated value, 50,000 shares
authorized, 23,000 shares issued and outstanding 690,000 P1,390,000
Additional Paid-in Capital:
Preference share Premium P175,000
Paid-in Capital from Exchange of Par for No-Par Shares 660,000
Paid-in Capital from Sale of Treasury Shares 15,500
Paid-in Capital from Conversion of PSC into OSC 225,000
Donated Capital 108,000 1,183,500
Total Contributed Capital P2,573,500
Retained Earnings 657,000
Total Shareholders’ Equity P3,230,500
P 10-2
Requirement 1
APC – Chapter 10 (2007 edition) page 5
Cash 80,000
Retained Earnings 80,000
Retained Earnings Appropriated for Treasury Shares 80,000
b. Preference Share Capital (10,000 sh x P100) 1,000,000
Preference Share Premium (10,000 sh x P5) 50,000
PIC from Conversion of PSC into OSC 250,000
Ordinary Share Capital (10,000 x 4 x P20) 800,000
c. Accounts Payable 12,500
Ordinary Share Capital (500 sh x P20) 10,000
Ordinary Share Premium 2,500
d. Retained Earnings 571,000
Dividends Payable 571,000
PSC= 40,000 x P100 = P4,000,000 x 5% = P200,000
OSC = (150,000 + 40,000 + 500 – 5,000) x P2 =P371,000
e. Land 50,000
Treasury Shares (2,000 sh x P16) 32,000
PIC from Sale of Treasury Shares 18,000
Retained Earnings Appropriated for treasury Shares 32,000
Retained Earnings 32,000
f. Ordinary Share Capital, P20 par(150,000 + 40,000 + 500) x P20 3,810,000
Ordinary Share Capital, P10 par 3,810,000
g. Income Summary 200,000
Retained Earnings 200,000
2. SHAREHOLDERS’ EQUITY
Contributed Capital:
Share Capital:
5% Preference Share Capital, P100 par, 40,000 shares
issued and outstanding P4,000,000
Ordinary Share Capital, P10 par, 381,000 shares issued,
378,000 shares outstanding, 3,000 shares in treasury 3,810,000 P 7,810,000
Additional Paid-in Capital:
Preference Share Premium P 200,000
Ordinary Share Premium 752,500
Paid-in Capital from Sale of Treasury Shares 18,000
Paid-in Capital from Conversion of PSC into OSC 250,000 1,220,500
Total Contributed Capital P 9,030,500
Retained Earnings:
Retained Earnings Appropriated for treasury Shares P 48,000
Unappropriated Retained Earnings 1,081,000 1,129,000
Total Contributed Capital and Retained Earnings P10,159,500
Less Treasury Shares at Cost (3,000 shares) 48,000
Total Shareholders’ Equity P10,111,500
APC – Chapter 10 (2007 edition) page 7
P 10 – 3
SHAREHOLDERS’ EQUITY
Contributed Capital:
Share Capital:
10% Preference Share Capital, P50 par, 115,000
shares issued and outstanding P 5,750,000
Ordinary Share Capital, P5 par, 2,050,000 shares
issued, including 5,000 shares in the treasury 10,250,000 P16,000,000
Additional paid-in capital:
Preference Share Premium P 1,150,000
Ordinary Share Premium 5,375,000
Paid-in Capital from Sale of Treasury Shares 30,000 6,555,000
Total Contributed Capital P22,555,000
Retained Earnings:
Retained Earnings Appropriated for Treasury Shares P 70,000
Unappropriated Retained Earnings 4,310,000 4,380,000
Total Contributed Capital and Retained Earnings P26,935,000
Less Treasury Shares, at cost (5,000 shares) 70,000
Total Shareholders’ Equity P26,865,000
*A work sheet may be prepared to facilitate computation of the above balances.
Problem 10 – 4
Assets Liabilities SE APIC RE Net Income
1. D NE D NE NE NE
2. I NE I I NE NE
3. I NE I D* NE* NE
I NE I NE* D* NE
4. NE NE NE D D NE
*The indicated loss may be debited to the APIC arising from sale of the treasury Share Capital in No. 2
or such indicated loss may be debited to retained earnings.
P 10-5
Javier Company
Statement of Changes in Shareholders’ Equity
For the Fiscal Year Ended June 30, 2009
PS OS APIC RE TS
Balances, June 30, 2008 P3,000,000 P1,000,000 P 9,200,000 P2,550,000
Issuance of 5,000 PSC @ P140 500,000 200,000
Issuance of 20,000 OSC @ P70 200,000 1,200,000
Retirement of 1,000 PSC @ P150 ( 100,000) ( 40,000) ( 10,000)
Purchase of 500 TS @ P80 P400,000
Share l split of 2 for 1
Reissuance of TS @ P52 60,000 ( 200,000)
Declaration of dividends
PSC = P3,400,000 x 10% ( 340,000)
OSC = 235,000 x P6 ( 1,410,000)
Profit for the year 750,000
Balances, June 30, 2009 P3,400,000 P1,200,000 P10,620,000 P1,540,000 P200,000
APC – Chapter 10 (2007 edition) page 8
MC10-7 B
MC10-9 B
MC10-10 C
TM 39
1. T 6. T 11. T 16. F
2. T 7. T 12. T 17. F
3. F 8. T 13. F 18. T
4. F 9. F 14. F 19. T
5. F 10. T 15. T 20. F
TM 40
1. Treasury shares
2. Convertible preference shares
3. Stock or share split / share split-up
4. Recapitalization
5. Paid-in Capital from Retirement of Share Capital
6. Cost method
7. Share split down / reverse share split
8. Retained Earnings
9. Decrease
10. Retained Appropriated for Treasury shares
APC – Chapter 10 (2007 edition) page 9
TM 41
1. D
2, C
3. D
4. A
5. B
6. A
7. D
8. C
9. C
10. D
11. A 6,000 x P20 = P120,000 (same as before the Share Capital split)
12. D
13. C 20,000 x P30 = P600,000
14. B
15. B Authorized - 10,000; Issued - 4,400; Outstanding - 4,400 - 500 = 3,900
16. A Authorized - 10,000 x 2 = 20,000; Issued - (4,400 + 100) x 2 = 9,000;
Outstanding - (4,400 - 500 + 100) x 2 = 8,000
17. A P1,650,000 - (1,000 shares x P40) = P1,610,000
18. C 100,000 shares x P30 = P3,000,000
19. B (100,000 sh x P50) + (5,000 sh x P20) - (15,000 sh x P15) = P4,875,000
20. B 100,000 shares x 3 - 300,000 shares - 15,000 shares = 285,000 shares
TM 42
Problem A:
Outstanding Ordinary Add'l Paid-In Retained
Shares Share Capital Capital Earnings TSE
1. 230,000 P 4,600,000 P1,350,000 P4,650,000 P10,600,000
2. 400,000 4,000,000 1,200,000 5,400,000 10,600,000
3. 400,000 8,000,000 1,200,000 1,400,000 10,600,000
4. 200,000 3,000,000 2,200,000 5,400,000 10,600,000
5. 195,000 3,900,000 1,180,000 5,400,000 10,480,000
TM 43
a. Preference Share Capital (500 sh x P100) 50,000
Preference Share Premium (500 sh x P20) 10,000
Paid-In Capital from Retirement of PSC 2,500
Cash (500 sh x P115) 57,500
Cash 28,000
APC – Chapter 10 (2007 edition) page 10