propriated, January 1, 2019 as restated 3,355,000.

00
propriated, December 31, 2019 4,045,000.00
5,725,000.00
24,770,000.00
 Ordinary Shares Preference Shares
Date Share Premium
Issued Subscribed Issued Subscribed
Beginning 1,200,000.00 - 1,800,000.00 - 2,400,000.00
PPE

6-Jan-19 45,000.00 697,500.00

31-Jan-19 72,000.00
22-Feb-19
28-Feb-19 42,000.00 1,050,000.00
15-Mar-19 36,000.00 (36,000.00) -
15-Mar-19 (6,000.00) (72,000.00)
30-Aug-19
14-Sep-19 18,900.00 170,100.00

30-Nov-19

15-Dec-19
1,299,900.00 - 1,800,000.00 - 4,317,600.00

TOTAL SHE 8,184,050.00

JOURNAL ENTRIES:

6-Jan-19 Land 742,500.00

Ordinary Share Capital 45,000.00
Share Premium: OSC 697,500.00

31-Jan-19 Cash 2,352,000.00

Discount on Bonds Payable 120,000.00
Bonds payable 2,400,000.00
Share Warrants Outstanding 72,000.00

22-Feb-19 Treasury Shares 360,000.00

Cash 360,000.00

Unappro RE 360,000.00
Appro RE 360,000.00

28-Feb-19 Cash 546,000.00

Subscription Receivable 546,000.00
Subscribed Ordinary Share Capital 42,000.00
Share Premium: Subs. OSC 1,050,000.00

15-Mar-19 Cash 468,000.00

 Subscription Receivable 468,000.00

Subscribed Ordinary Share Capital 36,000.00

Share Premium: Subs. OSC 900,000.00
Ordinary Share Capital 36,000.00
Share Premium:OSC 900,000.00

Subscribed Ordinary Share Capital 6,000.00

Share Premium: Subs. OSC 150,000.00
Subscription Receivable 78,000.00
Share Premium 78,000.00

30-Aug-19 Cash 120,000.00

Unappro RE 24,000.00
Treasury Shares 144,000.00

Appro RE 144,000.00
Unappro RE 144,000.00

14-Sep-19 Share Warrants Outstanding 56,700.00

Cash 189,000.00
Ordinary Share Capital 18,900.00
Share Premium:OSC 226,800.00

30-Nov-19 Unappro RE 645,450.00

Cash Dividends Payable 645,450.00

15-Dec-19 Unappro RE 108,000.00

Cash Dividends Payable 108,000.00

Net Income Income Summary 840,000.00

Retained Earnings 840,000.00
PRIOR PERIOD ERROR
Unappro RE 60,000.00
Accumulated Depreciation 60,000.00

REQUIREMENTS:

1. Share Capital - Ordinary at December 31, 2019 1,299,900.00 D

2. Total Share Premium as of December 31, 2019 4,317,600.00 B
3. Unappropriated Retained Earnings on December 31, 2019 766,550.00 C
4. Total Shareholder's Equity 8,184,050.00 A
 24.00 1.00 100.00
Retained Earnings Outstanding Shares
Treasury Shares
Appropriated Unappropriated Ordinary Preference
- 980,000.00 1,200,000.00 18,000.00
(60,000.00)
920,000.00
45,000.00

(360,000.00) 360,000.00 (360,000.00) (15,000.00)

42,000.00
-
(6,000.00)
144,000.00 (144,000.00) 120,000.00 6,000.00
18,900.00
1,290,900.00
(645,450.00)
840,000.00
(108,000.00)
(216,000.00) 216,000.00 766,550.00

Total Consideration 2,352,000.00

Liability Component 2,280,000.00
Equity Compoment 72,000.00

Issued Default Total

Shares 36,000.00 6,000.00 42,000.00
Share Capital 36,000.00 6,000.00 42,000.00
Premium 900,000.00 150,000.00 1,050,000.00
Cash 468,000.00 78,000.00 546,000.00
Subscription Rec 468,000.00 78,000.00 546,000.00

Exercised Not Exercised

0.79 0.21
1,890.00 510.00 2,400.00
SWO 56,700.00 15,300.00 72,000.00
Ordinary Shares 18,900.00 5,100.00
Issue Price 189,000.00
Par Values
 OSC PSC APIC Contributed Capital Legal Capital
410,000.00
50,000.00 50,000.00 50,000.00
460,000.00 460,000.00 460,000.00 -
900,000.00 900,000.00 900,000.00 900,000.00
45,000.00 45,000.00 45,000.00
112,000.00 112,000.00 112,000.00 -
400,000.00 400,000.00 400,000.00 400,000.00
4,000.00 4,000.00 4,000.00
3,000.00 -
20,000.00 20,000.00 20,000.00
(500,000.00) (500,000.00) (500,000.00) (500,000.00)
(100,000.00) (100,000.00) (100,000.00) (100,000.00)
25,000.00 25,000.00 25,000.00
220,000.00 -
100,000.00
(15,000.00) (15,000.00)
(20,000.00) (20,000.00)
400,000.00 300,000.00 621,000.00 1,381,000.00 795,000.00

REQUIREMENTS:
1. Ordinary Share Capital 400,000.00 D
2. Preference Share Capital 300,000.00 D
3. Additional Paid in Capital 621,000.00 C
4. Total Contributed Capital 1,381,000.00 D
5. Legal Capital 795,000.00 C
6. Total Shareholder's Equity 2,114,000.00 C

ALTERNATIVE SOLUTION:
 Ordinary Share Capital
Authorized ordinary share at P10 par value
Unissued ordinary shares
Ordinary shares issued

 Preference Share Capital

Authorized preference share at P50 par value
Unissued preference shares
Preference shares issued
 Additional Paid-In Capital
Additional paid-in capital on ordinary shares
Additional paid-in capital on preference shares
Additional paid-in capital on sale of TS
Ordinary share warrants outstanding
Donated capital
Total additional paid-in capital

 Total Contributed Capital

Ordinary shares issued
Preference shares issued
Ordinary shares subscribed , net of subs receivable, 20,000
Preference shares subscribed , net of subs receivable, 15,000
Total additional paid-in capital
Total Contirbuted Capital

 Total Legal Capital

Ordinary shares issued
Preference shares issued
Ordinary shares subecribed
Preference shares subscribed

 Total Shareholders’ Equity

Total Contirbuted Capital
Unrealized increase in value of securities AFS
Revaluation increment in properties
Accumulated profits - unappropriated
Reserve of bond sinking fund
Total SHE
 SHE
410,000.00
50,000.00
460,000.00
900,000.00
45,000.00
112,000.00
400,000.00
4,000.00
3,000.00
20,000.00
(500,000.00)
(100,000.00)
25,000.00
220,000.00
100,000.00
(15,000.00)
(20,000.00)
2,114,000.00

900,000.00
(500,000.00)
400,000.00

400,000.00
100,000.00
300,000.00
 460,000.00
112,000.00
4,000.00
20,000.00
25,000.00
621,000.00

400,000.00
300,000.00
30,000.00
30,000.00
621,000.00
1,381,000.00

400,000.00
300,000.00
50,000.00
45,000.00
795,000.00

1,381,000.00
3,000.00
100,000.00
410,000.00
220,000.00
2,114,000.00
JOURNAL ENTRIES:

1-Jun Treasury Stock (40,000 x 40) 1,600,000.00

Cash 1,600,000.00
1-Jun
1-Jul Cash 675,000.00 1-Jul
Treasury Stock (15,000 x 40) 600,000.00 30-Aug
Paid in capital from TS 75,000.00 1-Sep

15-Jul 250,000 shares (P10 par) issued to 500,000 (P5 par)

25,000 shares (P40 cost) TS to 50,000 (P20 cost)

30-Aug Cash 510,000.00

Paid in capital from TS 75,000.00
Retained Earnings 95,000.00
Treasury stock 680,000.00

1-Sep Common Stock 10,000.00

Paid in capital in excess of par 15,000.00
Retained Earnings 15,000.00
Treasury stock 40,000.00

REQUIREMENTS:
1. Treasury Stock 280,000.00 B
2. Common Stock 2,490,000.00 A
3. Paid-in Capital in Excess of Par 3,735,000.00 C
4. Paid-in Capital from Treasury Stock 0.00 D
5. Retained Earnings 1,690,000.00 A
 40.00
Paid-in Cap Paid-in Cap
Treasury Stock Common Stock RE
excess of Par TS
2,500,000.00 3,750,000.00 1,800,000.00
1,600,000.00
(600,000.00) 75,000.00
(680,000.00) (75,000.00) (95,000.00)
(40,000.00) (10,000.00) (15,000.00) (15,000.00)
280,000.00 2,490,000.00 3,735,000.00 - 1,690,000.00
 2-Feb-19 Treasury Shares 1,485,000.00
Cash 1,485,000.00

Unappro: RE 1,485,000.00
Appro:RE 1,485,000.00

30-Apr-19 Unappro: RE 157,500.00

Cash Dividends Payable 157,500.00

30-Apr-19 Unappro: RE 150,000.00

Cash Dividends Payable 150,000.00

30-Sep-19 Preference Share Capital 600,000.00

Ordinary Share Capital 75,000.00
Premium: OSC 525,000.00

31-Oct-19 Unappro: RE 165,000.00

Cash Dividends Payable 165,000.00

31-Oct-19 Unappro: RE 112,500.00

Cash Dividends Payable 112,500.00

21-Dec-19 Cash 594,000.00

Subscription Receivable 396,000.00
Subscribed Ordinary Share Capital 150,000.00
Share Premium: OSC 840,000.00

31-Dec-19 Income Summary 1,980,000.00

Retained Earnings 1,980,000.00

1-Feb-20 Cash 336,600.00

Subscription Receivable 336,600.00

Subscribed Ordinary Share Capital 127,500.00

Share Premium: Subscribed OSC 714,000.00
Ordinary Share Capital 127,500.00
Share Premium: OSC 714,000.00

Subscribed Ordinary Share Capital 22,500.00

Share Premium: OSC 126,000.00
Subscription Receivable 59,400.00
Share Premium 89,100.00

15-Apr-20 Cash 1,500,000.00

 Share Premium: TS 510,000.00
Treasury Shares 990,000.00

Appro : RE 990,000.00
Unappro:RE 990,000.00

30-Apr-20 Unappro: RE 192,750.00

Cash Dividends Payable 192,750.00

Unappro: RE 112,500.00
Cash Dividends Payable 112,500.00

16-May-20 Unappro: RE 154,200.00

Stock Dividends Distributable-PSC 154,200.00

31-Oct-20 Unappro: RE 192,750.00

Cash Dividends Payable 192,750.00

Unappro: RE 122,137.50
Cash Dividends Payable 122,137.50

31-Dec-20 Income Summary 2,670,000.00

Retained Earnings 2,670,000.00

REQUIREMENTS:
1 Share Premium - December 31, 2019
2 Retained Earnings (before Appropriation for Treasury Shares)
13,410,000.00
1,485,000.00
3 Share Premium - December 31, 2020
4 Retained Earnings (before Appropriation for Treasury Shares)
16,295,662.50
495,000.00
 10,365,000.00
14,895,000.00

13,410,000.00
1,485,000.00
14,895,000.00

990,000.00

990,000.00

25,500
Paid
504,900.00
841,500.00
127,500.00
714,000.00

841,500.00

504,900.00
 385,500.00
100.00
3,855.00

10,365,000.00 A
14,895,000.00 B

10,838,100.00 B
16,790,662.50 D
 10.00 200.00 19.00
Ordinary Preference Total Share Retained Earnings Treasury
Share Capital Share Capital Premium Appro Unappro Shares
CY 2019
2-Jan 100,000.00 60,000.00
2-Jan 600,000.00 48,000.00
2-Mar 108,000.00 129,600.00
2-Mar 27,000.00 40,500.00
10-Jul 120,000.00 9,600.00
10-Jul 270,000.00 400.00
16-Dec (72,000.00)
16-Dec (75,750.00)
31-Dec 450,000.00
505,000.00 720,000.00 288,100.00 - 302,250.00 -
CY 2020
27-Feb 228,000.00 (228,000.00) (228,000.00)
17-Jun 40,000.00 (190,000.00) 190,000.00 190,000.00
31-Jul (2,000.00) (38,000.00) 38,000.00 38,000.00
30-Sep 110,000.00 121,000.00
16-Dec (72,000.00)
16-Dec (49,200.00)
31-Dec 425,000.00
615,000.00 720,000.00 447,100.00 - 606,050.00 -

REQUIREMENTS:
1. Preference Share Capital 720,000.00 C
2. Ordinary Share Capital 615,000.00 B
3. Total Share Premium 447,100.00 B
4. Unappropriated Retained Earnings 606,050.00 C
5. Total Shareholder's Equity 2,388,150.00 A
 Outstanding
Ordinary Preference

10,000.00
3,000.00
10,800.00
2,700.00
600.00
27,000.00

50,500.00

50,500.00 3,600.00

(12,000.00)
10,000.00
2,000.00
11,000.00

61,500.00

61,500.00 3,600.00
 Ordinary Shares Preference Shares
2-Jan-15 80,000.00 40,000.00
31-Dec-15 1,600.00 -
31-Dec-15 81,600.00 40,000.00
1-May-17 40,000.00
31-Dec-17 121,600.00 40,000.00
1-Jan-18 60,800.00
31-Dec-18 182,400.00 40,000.00
1-Jan-19 182,400.00
1-Jul-19 16,000.00 (8,000.00)
31-Dec-19 380,800.00 32,000.00

CY 2018
182,400.00 182,400.00
3.00 5.00
547,200.00 912,000.00 1,459,200.00

CY 2019
364,800.00 380,800.00
2.50 2.00
912,000.00 761,600.00 1,673,600.00

REQUIREMENTS:
 Outstanding number of ordinary shares as of December 31, 2019
 Outstanding number of preference shares as of December 31, 2019
 Amount of cash dividends declared and paid to ordinary shareholders for the year 2018
 Amount of cash dividends declared and paid to ordinary shareholders for the year 2019
 380,800.00 D
32,000.00 C
r the year 2018 1,459,200.00 C
r the year 2019 1,673,600.00 D
 1-Dec Retained Earnings 120,000.00
Property Dividends Payable 120,000.00

31-Dec Retained Earnings 6,000.00 Trading Securities

Property Dividends Payable 6,000.00

31-Jan Retained Earnings 4,000.00

Property Dividends Payable 4,000.00

Property Dividends Payable 130,000.00

Trading Securities 126,000.00
Gain 4,000.00

 The entry to record the declaration of the property dividends would include a debit to retained earnings a
 The carrying value of property dividends on December 31 shall be:
 The entry on January 31 upon the distribution of the dividends shall involve a credit to gain at:
Trading Securities 16,000.00
Unrealized Holding Gain 16,000.00

120,000.00 C
126,000.00 D
4,000.00 B
 31-Oct Retained Earnings 900,000.00
Property Dividends Payable 900,000.00

NCA -HFS 720,000.00

AD: Building 80,000.00
Building 800,000.00

31-Dec Property Dividends Payable 200,000.00

Retained Earnings 200,000.00

Loss 20,000.00
NCA -HFS 20,000.00

31-Jan Retained Earnings 100,000.00

Property Dividends Payable 100,000.00

Property Dividends Payable 800,000.00

NCA -HFS 700,000.00
Gain 100,000.00

REQUIREMENTS:
 The entry to record the declaration of the property dividends would include a debit to retained earnings of:
 How much property dividends payable should be reported in the statement of financial position as of December 31
 How much should be charges to the profit or loss as a result of the remeasurement of the property dividends payab
 What is the gain or loss to be recognized in the profit or losses as a result of the distribution of the property dividen
 ned earnings of: 900,000.00 C
sition as of December 31? 700,000.00 A
roperty dividends payable by December 31, 2019? 0.00 A
n of the property dividends on January 31? 100,000.00 B
 5.00
Shares Iss. & Out. Share Capital Share Premium
Balance 400,000.00 2,000,000.00 850,000.00
Issuance -Jan 5 10,000.00 50,000.00 40,000.00
410,000.00 2,050,000.00 890,000.00
Div dec- Jan 16
Issuance -Feb 10 40,000.00 200,000.00 240,000.00
450,000.00 2,250,000.00 1,130,000.00
Stock Div -May 1 180,000.00 900,000.00
630,000.00 3,150,000.00 1,130,000.00
Split Up- April 1 630,000.00
1,260,000.00 3,150,000.00 1,130,000.00
Issuance - July 1 126,000.00 315,000.00 945,000.00
1,386,000.00 3,465,000.00 2,075,000.00
Cash Div - Aug 1
December 31
1,386,000.00 3,465,000.00 2,075,000.00

REQUIREMENTS:
 Number of shares issued and outstanding as of December 31, 2019
 Balance of share capital as of December 31, 2019
 Balance of share premium as of December 31, 2019
 Balance of retained earnings as of December 31, 2019
Retained Earnings
3,000,000.00
-
3,000,000.00
(164,000.00)

2,836,000.00
(900,000.00)
1,936,000.00

1,936,000.00
(1,260,000.00)
676,000.00
(554,400.00)
1,880,000.00
2,001,600.00

1,386,000.00 B
3,465,000.00 A
2,075,000.00 A
2,001,600.00 D
CONDITIONS:
Average Increase in the No. of Share
Volume of Sales Options
between 5% & 10% 100.00
between 11% & 15% 200.00
16% or more 300.00

Estimated Ave. Inc. in No. of Share

Year Beginning Actual Ending
Additional Sales Volume Options

Y1 100.00 7.00 13.00 80.00 6% 200.00

Y2 93.00 5.00 3.00 85.00 16% 300.00
Y3 88.00 2.00 - 86.00 16% 300.00

REQUIREMENTS
 Compensation Expense for Year 1 106,666.67 A
 Compensation Expense for Year 2 233,333.33 C
 Compensation Expense for Year 3 176,000.00 B
 Cumulative Compensation Expense for Years 1, 2 & 3 516,000.00 B
 At the end of Year 2, the entity should report share options
outstanding of: 340,000.00 D
 Cumulative Share
Fair Value at Compensation
Total Options
Grant Date Expense
Outstanding
20.00 320,000.00 106,666.67 106,666.67
20.00 510,000.00 340,000.00 233,333.33
20.00 516,000.00 516,000.00 176,000.00
 No. of
Estimated
Year Beginning Actual Employees Ending No. of SARs
Additional
who Exercised

Y1 500.00 35.00 60.00 - 405.00 100.00

Y2 465.00 40.00 25.00 - 400.00 100.00
Y3 425.00 22.00 - 150.00 253.00 100.00
Y4 253.00 - - 140.00 113.00 100.00
Y5 140.00 113.00 - 100.00

Year 1 Salaries Expense 194,400.00

Salaries Payable 194,400.00

Year 2 Salaries Expense 218,933.33

Salaries Payable 218,933.33

Year 3 Salaries Expense 47,126.67

Salaries Payable 47,126.67

Salaries Expense 225,000.00

Cash 225,000.00

Year 4 Salaries Payable 218,640.00

Salaries Expense 61,360.00
Cash 280,000.00

Year 5 Salaries Payable 241,820.00

Salaries Expense 40,680.00
Cash 282,500.00

REQUIREMENTS
 What amount of compensation expense should be recognized in Year 1?
 What amount of compensation expense should be recognized in Year 2?
 What amount of compensation expense should be recognized in Year 3?
 What amount of compensation expense should be recognized in Year 4?
 What amount of compensation expense should be recognized in Year 5?
 What amount of salaries payable should the entity report at the end of year 3?
 What amount of salaries payable should the entity report at the end of year 4?
 Increase
Fair Value at (Decrease) in
Total Cumulative
Grant Date Salaries
Payable
14.40 583,200.00 194,400.00 194,400.00 194,400.00
15.50 620,000.00 413,333.33 218,933.33 218,933.33
18.20 460,460.00 460,460.00 47,126.67 225,000.00 272,126.67
21.40 241,820.00 241,820.00 (218,640.00) 280,000.00
- - - (241,820.00)

194,400.00 D
218,933.33 C
272,126.67 A
61,360.00 B
40,680.00 C
460,460.00 D
241,820.00 A
The share options are under a variable option with a non-market based condition, thus:

Year 1 Year 2 Year 3

After Revenue
1 year 15,000,000.00 Y1 14,500,000.00
2 years 18,000,000.00 Y2 18,125,000.00 17,500,000.00
3 years 20,000,000.00 Y3 22,656,250.00 21,875,000.00 20,500,000.00

CY
2017 Y1 500 70 2 8
2018 Y2 500 68 3 5
2019 Y3 500 65 2 0
2020 Y4 500 63 3 0 45

Y1 Salaries Expenses 270,000.00

Share options Outstanding 270,000.00

Y2 Salaries Expenses 90,000.00

Share options Outstanding 90,000.00

Y3 Salaries Expenses 207,000.00

Share options Outstanding 207,000.00

Y4 Salaries Options Outstanding 405,000.00

Cash 787,500.00 -
OS Premium 450,000.00
OS Capital 742,500.00

REQUIREMENTS:
 What is the compensation expense related to the share option plan to
be recognized in the 2017 financial statements?
 What is the compensation expense related to the share option plan to
be recognized in the 2018 financial statements?
 What is the balance of the additional paid-in capital account related
to the share options as of December 31, 2019?
 What is the balance of the ordinary shares options outstanding account
as of December 31, 2020?
 What is the resulting share premium from the issuance of shares from the
exercise of the employee options?
 60 18.00 540,000.00 270,000.00 270,000.00
60 18.00 540,000.00 360,000.00 90,000.00
63 18.00 567,000.00 567,000.00 207,000.00
15 18.00 135,000.00 135,000.00 (432,000.00)

270,000.00 B

90,000.00 D

567,000.00 C

135,000.00 A

742,500.00 C
 No. of Employees
FV of SO at
Initial Actual Add'l Est. Ending No. of SO
Grant Date
CY 2017 600.00 5.00 45.00 550.00 100.00 5.00
CY 2018 595.00 20.00 35.00 540.00 100.00 5.00
CY 2019 575.00 30.00 - 545.00 100.00 5.00

REQUIREMENTS:
 What is the compensation expense in 2017?
 What is the compensation expense in 2018?
 What is the compensation expense in 2019?
 What is the ordinary share options outstanding as of December 31, 2018?
 Salaries
Total Cumulative
Expense
275,000.00 91,666.67 91,666.67
270,000.00 180,000.00 88,333.33
272,500.00 272,500.00 92,500.00

91,666.67
88,333.33
92,500.00
180,000.00
Fair Value of Share AlternatiVe 1,200.00 57,600.00
Liability : Cash Alternative 1,000.00 50,000.00
Equity: Share Alternative 7,600.00

Cumulative Comp Exp SOO

Year 1 52,000.00 17,333.33 17,333.33 2,533.33 19,866.67
Year 2 55,000.00 36,666.67 19,333.33 2,533.33 21,866.67
Year 3 60,000.00 60,000.00 23,333.33 2,533.33 25,866.67

Scenario 1
Accrued Salaries Payable 60,000.00
Share options outstanding 7,600.00
Cash 60,000.00
Share premium 7,600.00

Scenario 2
Accrued Salaries Payable 60,000.00
Share options outstanding 7,600.00
Share capital 12,000.00
Share premium 55,600.00
 Outstanding 9.00 10.00
TS OSC Share Premium
May , 2017 90,000.00 900,000.00 90,000.00
July 3, 2018 150,000.00 1,500,000.00 375,000.00
240,000.00
Nov. 6, 2018 12,000.00 120,000.00 12,000.00
Dec. 31, 2018
31-Dec-18 252,000.00 - 2,520,000.00 477,000.00
Feb., 2019 (9,000.00) 81,000.00
June, 2019 4,500.00 (40,500.00) 13,500.00
Oct., 2019 150,000.00 1,500,000.00 450,000.00
Nov. , 2019 240,000.00 2,400,000.00 720,000.00
637,500.00

Dec. , 2019 (3,000.00) (30,000.00) 3,000.00

3,000.00 (27,000.00)

31-Dec-19 637,500.00 13,500.00 6,390,000.00 1,663,500.00

REQUIREMENTS:
1. What are the balances of the following on December 31, 2017?
Ordinary Share Capital 900,000.00
Share Premium 90,000.00
Retained Earnings 37,500.00

2. What are the balances of the following on December 31, 2018?

Ordinary Share Capital 2,520,000.00
Share Premium 477,000.00
Retained Earnings 10,500.00

3. What are the balances of the following on December 31, 2019?

Ordinary Share Capital 6,390,000.00
Share Premium 1,663,500.00
Retained Earnings 59,250.00

4. What amount should be charged to Retained Earnings for the cash dividend declared on
December 31, 2019? 191,250.00

5. What is the treasury shares balance on December 31, 2019

13,500.00
Retained Earnings
37,500.00

(132,000.00)
105,000.00
10,500.00

(191,250.00)

240,000.00
59,250.00