CHAPTER10

Shar
eCapi
talTr
ansact
ionsSubsequentt
oOr
igi
nal
Issuance

E10-
1
1.
a Or dinaryShareCapit
al(2,
000shxP20) 40,
000
Or
dinarySharePremium (
2,000shxP5) 10,
000
Paid-
InCapit
alfr
om Retir
ementofOSC 20,
000
Cash(2,000shxP15) 30,
000

b OrdinaryShareCapit
al 40,
000
OrdinarySharePremium 10,
000
RetainedEarnings 10,
000
Cash( 2,
000shxP30) 60,
000

2. 200,000 – 2,
000 = 198,
000 shar
es i
ssued and
outstandi
ng

E10-2
1. Treasur
yShar
es(
5,000shxP20) 100,
000
Cash 100,
000

Ret
ainedEarni
ngs 100,
000
RetainedEar
ningsAppr
opr
iat
edf
orTr
easur
yShar
es 100,
000

Cash( 3,
500shxP28) 98,
000
TreasuryShares(3,
500xP20) 70,
000
Paid-I
nCapitalf
rom Sal
eofTr
easur
yShar
es 28,
000

Ret
ainedEar
ningsAppr
opr
iat
edf
orTr
easur
yShar
es 70,
000
Retai
nedEarni
ngs 70,
000

SHAREHOLDERS’
EQUI
TY
2.Contribut edCapi tal:
Or dinar yShar eCapi tal,P25par ,100,000sharesissued,
98,500 shar es out st
anding,1, 500 shar es int he P2,
500,
000
treasur y
Or dinar yShar ePr emi um 1,
000,
000
Pai d-i
nCapi talfrom Sal eofTreasur yShares 28,
000 P3,
528,
000
RetainedEar ni
ngs:
Ret ainedEar ni
ngsAppr opr
iat
edf orTreasuryShares P 30,000
Unappr opr i
atedRet ai nedEarnings 1,
470,
000 1,
500,
000
TotalCont ri
butedCapi t alandRet ainedEar ni
ngs P5,
028,
000
LessTr easur yShar es, atcost-1, 500shar es 30,
000
TotalShar eholders’Equi ty P4,
998,
000

E10-
3
1. Alt
ernati
ve1
a. Received5,
000Or
dinar
yShar
esasdonat
ionf
rom amaj
orshar
ehol
der

b. Cash 250,
000
APC–Chapt
er10(
2007edi
ti
on) page2

Donat
edCapi
tal 250,
000

Al
ter
nativ
e2
a. TreasuryShar
es 200,
000
DonatedCapi
tal 200,
000

b. Cash 250,
000
TreasuryShar
e 200,
000
PI
Cf r
om SaleofTr
easur
yShar
es(
orDonat
edCapi
tal
) 50,
000

2. af
tert
he aft
erthe
sal
e
donat
ion ofthedon
shs
I
ssued 150,
000shs 150,000shs
Out
standi
ng 145,
000shs 150,000shs

E10-
4
1.
a Pr eferenceShareCapit
al(2,
000shxP50) 100,
000
Pr
eferenceSharePremium 50,
000
PICf r
om Conver
sionofPSCint
oOSC 70,
000
OrdinaryShar
eCapital
(2,
000shx4xP10) 80,
000

b PreferenceShar
eCapit
al(2,
000shxP50) 100,
000
PreferenceShar
ePremium 50,
000
RetainedEarni
ngs 50,
000
Ordinar
yShareCapi
tal
(2,
000shx10xP10) 200,
000

c PreferenceShar
eCapit
al(2,
000shxP50) 100,
000
PreferenceShar
ePremium 50,
000
RetainedEarni
ngs 10,
000
Ordinar
yShareCapi
tal
(2,
000shx8xP10) 160,
000

2.
a I
ssuedandout
standi
ng PS38,
000 OS108,
000
b PS38,
000 OS120,
000
c PS38,
000 OS116,
000

E10-
5
1.
a Ordi
nar
yShar
eCapi
tal
,P25par 500,
000
Ordi
nar
yShar
eCapi
tal
,P5par 500,
000

b Or
dinar
yShar
eCapi
tal
,P25par 500,
000
Ordi
nar
yShar
eCapi
tal
,P100par 500,
000

Or
dinar
yShar
eCapi
tal
,P25par 500,
000
c
Or
dinarySharePr emium 100,
000
OrdinaryShareCapit
al,
P15par(20,
000shxP15) 300,
000
Paid-I
nCapitalfr
om Reduct
ioni
nParValueofOSC 300,
000

d Or
dinar
yShar
eCapi
tal
,P25par
APC–Chapt
er10(
2007edi
ti
on) page3

500,
000
Or
dinar
ySharePremium 100,000
Ordi
naryShar
eCapital
,P25stat
edv al
ue 500,
000
PICfr
om ExchangeofParforNo-ParShar
eCapi
tal 100,
000

2 20,000x5=100,
000shs c.20,
000shs
a
b 20,
000/
4=5,
000shs d.20,
000shs

E10-
6
1.
a Treasur
yShar
es 50,
000
Cash 50,
000

Ret
ainedEarni
ngs 50,
000
RetainedEar
ningsAppr
opr
iat
edf
orTr
easur
yShar
es 50,
000

Cash (
4,000xP12) 48,
000
PI
Cfrom SaleofTr
easuryShar
es 8,
000
Tr
easuryShares(
4,000xP10) 40,
000

Ret
ainedEarni
ngsAppropr
iat
edf
ort
reasur
yShar
es 40,
000
RetainedEar
nings 40,
000

Cash( 1,
000xP7) 7,
000
PI
Cf rom Sal
eofTreasuryShar
es 3,
000
TreasuryShar
es(1,000xP10) 10,
000

Ret
ainedEarni
ngsAppropr
iat
edf
orTr
easur
yShar
es 10,
000
RetainedEar
nings 10,
000

b. Pr
eferenceShareCapit
al(1,
000xP100) 100,
000
Pr
eferenceSharePremium 20,
000
PICf r
om Conver
sionofPSCintoOSC 70,
000
OrdinaryShar
eCapital
(1,
000x10xP5) 50,
000

2. IssuedandOut
standi
ng PS 9,
000shs OS 510,
000
shs

P10-
1
1.
a PSC Subscri
pti
onReceivabl
e(10,
000shxP125) 1,
250,
000
OSC Subscri
pti
onReceivabl
e(20,
000shxP60) 1,
200,
000
PSCSubscr i
bed(10,
000shxP100) 1,
000,
000
OSCSubscr i
bed(20,
000shxP50) 1,
000,
000
Pref
erenceSharePremium 250,
000
Ordi
narySharePremium 200,
000

Cash 1,
225,
000
PSCSubscri
pti
onReceiv
able(P1,
250,
000x50%) 625,
000
OSC Subscr
ipt
ionRecei
vabl
e( 1,
200,
000x50%) 600,
000

b. Cash 1,
225,
000
APC–Chapt
er10(
2007edi
ti
on) page4

PSCSubscr
ipt
ionRecei
vabl
e 625,
000
OSCSubscr
ipt
ionRecei
vabl
e 600,
000

PSCSubscr ibed 1,
000,
000
OSC Subscr ibed 1,
000,
000
Pref
erenceShareCapit
al 1,
000,
000
Ordi
naryShareCapi
tal 1,
000,
000
c. TreasuryShares-Ordi
naryShar
eCapi
tal
(2,
500shxP55) 137,
500
Cash 137,
500

d. Pr
eferenceShareCapit
al(3,
000shxP100) 300,
000
Pr
eferenceSharePremium (3,
000xP25) 75,
000
OrdinaryShar
eCapital
(3,
000shxP50) 150,
000
PICf r
om Conver
sionofPSCintoOSC 225,
000

e. Cash(1,500shxP62) 93,
000
TreasuryShares(1,500shxP55) 82,
500
PICfrom SaleofTreasur
yShar
es 10,
500

f
. Recei
ved2,
000or
dinar
yshar
esasdonat
ionf
rom amaj
orshar
ehol
der

g. Cash(2,
000xP54) 108,
000
DonatedCapi
tal 108,
000

h. Cash(1,000shxP60) 60,
000
TreasuryShares(
1,000shxP55) 55,
000
PICfrom SaleofTr
easuryShar
es 5,
000

i
. Ordi
nar
yShareCapital,
P50par( 23,000xP50) 1,
150,
000
Ordi
nar
ySharePremi um 200,
000
Ordi
naryShareCapi t
al,P30st atedv al
ue( 23,
000shx 690,
000
P30)
PICfr
om ExchangeofParf orNo- ParShares 660,
000

j
. I
ncomeSummar y 750,
000
Ret
ainedEar
nings 750,
000

k. Ret
ainedEarni
ngs 93,
000
Divi
dendsPayabl
e 93,
000
PS= 7,000shxP100x10%=P70,
000
CS=23,000shxP1 = 23,
000

2. SHAREHOLDERS’EQUITY
Cont
ributedCapital
:
ShareCapi t
al:
10% Prefer
enceShareCapital
,P100par,20,
000shar
es
authori
zed,7,
000sharesi
ssuedandoutst
andi
ng
P700,
000
Ordi
naryShareCapit
al,
P30st
atedval
ue,
50,
000shares
author
ized,23,
000shar
esi
ssuedandout
standi
ng 690,
000 P1,
390,
000
Addi
ti
onalPai
d-inCapi
tal
:
APC–Chapt
er10(
2007edi
ti
on) page5

Prefer
enceshar ePr
emi um P175,
000
Paid-i
nCapitalfr
om ExchangeofParf orNo-ParShar
es 660,
000
Paid-i
nCapitalfr
om SaleofTr easur
yShares 15,
500
Paid-i
nCapitalfr
om ConversionofPSCi nt
oOSC 225,
000
DonatedCapi t
al 108,
000 1,
183,
500
Tot
alContri
butedCapital P2,
573,
500
Retai
nedEar ni
ngs 657,
000
TotalShareholders’Equit
y P3,
230,
500
P10-2
Requi
r ement1
a. Tr easur yShares–Or di
narySC( 5,000shxP16) 80,
000
Cash 80,
000
Ret
ainedEarni
ngs 80,
000
RetainedEar
ningsAppr
opr
iat
edf
orTr
easur
yShar
es 80,
000
b. Pr
eferenceShar
eCapi t
al(10,000shxP100) 1,
000,
000
Pr
eferenceShar
ePremi um (10,000shxP5) 50,
000
PICfrom Conver
sionofPSCi nt
oOSC 250,
000
OrdinaryShar
eCapital(
10,000x4xP20) 800,
000
c. Account
sPay abl
e 12,
500
Ordi
naryShareCapit
al(500shxP20) 10,
000
Ordi
narySharePremium 2,
500
d. Retai
nedEar ni
ngs 571,
000
DividendsPayabl
e 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
TreasuryShar
es(2,
000shxP16) 32,
000
PI
Cf r
om SaleofTr
easur
yShar
es 18,
000
Ret
ainedEarni
ngsAppropr
iat
edf
ort
reasur
yShar
es 32,
000
RetainedEar
nings 32,
000
f
. Ordi
nar
yShar
eCapi
tal
,P20par
(150,
000+40,
000+500)x 3,
810,
000
P20
Ordi
nar
yShar
eCapi
tal
,P10par 3,
810,
000
g. I
ncomeSummar y 200,
000
Ret
ainedEar
nings 200,
000

2. SHAREHOLDERS’ EQUITY
Cont
ributedCapital
:
ShareCapital:
5% Pr efer
ence Share Capi
tal
,P100 par ,40,000
shar
es
i
ssuedandout st
andi
ng P4,
000,
000
Ordi
naryShar e Capi
tal
,P10 par, 381,000 shar
es
APC–Chapt
er10(
2007edi
ti
on) page6

i
ssued,
378,000 shar es out standing,3, 000 shares i
n 3,
810,
000 P 7,
810,
000
tr
easur y
Additional Paid-i
nCapi t
al:
PreferenceShar ePremium P 200,
000
OrdinaryShar ePr emium 752,
500
Paid-i
nCapi talfrom SaleofTr easuryShares 18,
000
Paid-i
nCapi talfrom Conv ersi
onofPSC i ntoOSC 250,
000 1,
220,
500
Total ContributedCapi t
al P 9,
030,
500
Retai
nedEar ni
ngs:
RetainedEar ningsAppr opri
atedf ortreasuryShares P 48,
000
Unappr opriatedRet ainedEar nings 1,
081,
000 1,
129,
000
TotalCont ri
butedCapi tal andRet ainedEar ni
ngs P10,
159,
500
LessTreasur yShar esatCost( 3,000shar es) 48,
000
TotalShar eholders’Equity P10,
111,
500

P 10–3
SHAREHOLDERS’ EQUITY
Contri
but edCapi tal:
ShareCapi tal :
10% Pr ef erenceShar eCapi tal,P50par ,115,
000
shar esi ssuedandout standi ng P 5,
750,
000
Ordinar yShar eCapi tal,P5par ,2,050,000shar es
issued, i
ncluding5, 000shar esi nthet r
easury 10,
250,
000 P16, 000,
000
Addit i
onal pai d-incapi tal
:
PreferenceShar ePremi um P 1,
150,
000
Ordinar yShar ePr emi um 5,
375,
000
Paid-inCapi t
alfrom Sal eofTr easur yShares 30,
000 6,555,
000
Total Cont ribut edCapi t
al P22,555,
000
Retai
nedEar nings:
RetainedEar ningsAppr opriatedf orTr easuryShar es P 70,
000
Unappr opr i
at edRet ainedEar nings 4,
310,
000 4,380,
000
TotalCont ri
but edCapi tal andRet ainedEar nings P26,935,
000
LessTreasur yShar es,atcost( 5,000shar es) 70,
000
TotalShar eholder s’ Equity P26,865,
000
*Awor ksheetmaybepr epar edt ofacili
tatecomput at
ionoft
heabovebal
ances.

Probl
em 10–4
Assets Liabi
li
ti
es SE APIC RE NetI
ncome
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
*
Theindicat
edlossmaybedebi t
edtot
heAPI Car
isi
ngfrom saleofthet
reasur
yShar
eCapit
al
i
nNo.2orsuchi ndi
catedlossmaybedebi
tedtor
etai
nedearnings.

P10-
5
Javi
erCompany
St
atementofChangesi
nSharehol
der
s’Equi
ty
APC–Chapt
er10(
2007edi
ti
on) page7

Fort
heFi
scal
YearEndedJune30,
2009

PS OS APIC RE TS
Balances,June30, 2008 P3,
000,
000 P1,
000,
000 P 9,
200,000 P2,
550,
000
I
ssuanceof5, 000PSC@ P140 500,
000 200,000
I
ssuanceof20, 000OSC@ P70 200,
000 1,
200,000
Retir
ementof1, 000PSC@ P150 ( 100,
000) ( 40, 000) ( 10,
000)
Purchaseof500TS@ P80 P400,
000
Sharel spli
tof2f or1
ReissuanceofTS@ P52 60,000 (200,
000)
Declarat
ionofdividends
PSC=P3, 400,
000x10% ( 340,
000)
OSC=235, 000xP6 (1,
410,
000)
Profi
tfortheyear 750,
000
Balances,June30,2009 P3,
400,
000 P1,
200,
000 P10,
620,000 P1,
540,
000 P200,
000

MC10-
1 A Tot
alprofi
tsinceincor
porat
ion P 420,000
Tot
alcashdividendspaid (130,000)
Tot
alvalueofShar eCapi
tal
divi
dendsdi
str
ibut
ed (30, 000)
Ret
ainedearnings,end P 260,000

MC10-
2 B 1/
7-40,000shxP12 P 480,000
12/
2-6, 000shxP13 (78, 000)
12/
31-Profi
tfortheyear 300,000
Tot
alshar
eholder
s’equit
y,12/
31/
08 P 702,000

MC10-
3 B P15parx2=P305 P6.
00

MC10-
4 C 200,
000sh2=100,
000shxP5 500,
000
shs

MC10-
5 A 15,
000shx3xp25 P1,
125,
000

MC10-
6 A 1/1/07- 100,000shxP15 P1,
500,000
2007–2009-Pr of i
t 450,000
-Cashdi vi
dends (230,000)
1/10/ 09 -Treasur yShares( 6,
000shxP12) ( 72,000)
11/20/ 09 -Rei ssueofTr easuryShar
es(4,
000shx 32,000
P8)
Totalsharehol
ders’ equit
y P1,
680,
000

MC10-
7 B

MC10-
8 A Proceedsfrom sal
eoftreasuryShareCapi
tal P 210,
000
CostoftreasuryShareCapit
al 120,
000
Paid-
incapital
from sal
eoftreasur
yShareCapit
al P 90,000

MC10-
9 B
MC10-
10 C
APC–Chapt
er10(
2007edi
ti
on) page8

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. Tr easuryshar es
2. Conv ert
iblepr eferenceshar es
3. St ockorshar esplit/shar espli
t-
up
4. Recapi t
alization
5. Pai d-i
nCapi t
al f
rom RetirementofShar eCapi
tal
6. Costmet hod
7. Shar espl itdown/r everseshar espli
t
8. Ret ainedEar nings
9. Decr ease
10. RetainedAppr opri
atedforTr easuryshares
11. Memor andum ent ry
12. Sell
ingpr ice
13. ContributedCapi t
al
14. Reacqui si
t ionbydonat ion
15. Retir
ementofshar ecapital

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,
000xP20=P120,
000(
sameasbef
oret
heShar
eCapi
tal
spl
i
t)
12. D
13. C 20,
000xP30=P600,
000
14. B
15. B Authorized-10,000;Issued-4, 400;Out standing-4,
400-500=3, 900
16. A Authorized-10,000x2=20, 000;I ssued-( 4,400+100)x2=9, 000;
Outstanding-(4,400-500+100)x2=8, 000
17. A P1,650,000-(1,000sharesxP40)=P1, 610,000
18. C 100,000sharesxP30=P3, 000,
000
19. B (100,000shxP50)+( 5,
000shxP20)-( 15,000shxP15)=P4, 875,
000
20. B 100,000sharesx3-300, 000shar es-15, 000shares=285,000shares

TM 42
Pr
oblem A:
Out
standi
ng Or
dinar
y Add'
lPai
d-I
n Ret
ained
APC–Chapt
er10(
2007edi
ti
on) page9

Shares ShareCapi
tal Capit
al Earni
ngs 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. Pr eferenceShareCapit
al(500shxP100) 50,
000
PreferenceSharePremium (500shxP20) 10,
000
Pai
d-InCapit
alfr
om Retir
ementofPSC 2,
500
Cash( 500shxP115) 57,
500

PSC3,
500shs OSC10,
000shs

b. Tr
easur
yShar
es(
1,000shxP25) 25,
000
Cash 25,
000

Cash 28,
000
Treasur
yShares 25,
000
Paid-
InCapi
talf
rom Sal
eofTr
easur
yShar
es 3,
000

PSC4,
000shs OSC 10,
000shs

c. Pr
eferenceShareCapi t
al(1,
000shxP100) 100,
000
Pr
eferenceSharePremi um (
1,000shxP20) 20,
000
OrdinaryShareCapit
al(1,
000shx4xP20) 80,
000
PICf rom Conver
sionofPSCi nt
oOSC 40,
000

PSC 3,
000shs OSC 14,
000shs

d. Or
dinar
yShareCapi
tal
,P20par 200,
000
Ordi
naryShar
eCapi
tal
,P5par 200,
000
PSC 4,000shs OSC 40,
000shs