Philippine Christian University - Dasmarinas Campus

JOMARK V. YBAROLA FINANCIAL ACCOUNTING AND

REPORTING
BS ACCOUNTANCY- 2 (PARTNERSHIP AND CORPORATION)

TEST 1 – MULTIPLE CHOICES

1. B
2. D
3. C
4. C
5. C
6. C
7. C
8. A
9. A
10. B

11-15 (Journal Entries)

June 10 Treasury Shares (2,500 x 90) 225,000

Cash 225,000

15 Cash 80,000
Treasury Shares (800 x 90) 72,000
Paid in Capital from Treasury Shares 8,000

20 Cash (600 x 75) 45,000

Paid in Capital from Treasury Shares 8,000
Retained Earnings 1,000
Treasury Shares (600 x 90) 54,000

25 Ordinary Share Capital (500 x 100) 50,000

Treasury Shares (500 x 90) 45,000
Share Premium- Stock Retirement 5,000

30 Retained Earnings 54,000

Appropriation Reserved for Treasury Shares 54,000
(2,500-800-600-500 = 600 x 90)

(Revised Total Stockholders of DEF Corporation)

11. Paid in Capital

Ordinary share capital- 100 Par, 18,300 shares issued
Of which 1,700 shares are in treasury. 1,830,000
Additional Paid in Capital:
Share Premium- Ordinary 50,000

JOMARK YBAROLA
 Philippine Christian University - Dasmarinas Campus

Share Premium- Treasury Shares 10,500

Share Premium- Stock Retirement 0 60,500
Total Paid in Capital 1,890,500
Retained Earnings:
Unappropriated Retained Earnings 1,400,000
Appropriated Retained Earnings 153,000 1,553,000
Total 3,443,500
Less: Treasury Shares 153,000
Shareholder’s Equity 3,290,500

12. Paid in Capital

Ordinary share capital- 100 Par, 18,900 shares issued
Of which 1,100 shares are in treasury. 1,890,000
Additional Paid in Capital:
Share Premium- Ordinary 50,000
Share Premium- Treasury Shares 2,500
Share Premium- Stock Retirement 0 52,500
Total Paid in Capital 1,942,500
Retained Earnings:
Unappropriated Retained Earnings 1,399,000
Appropriated Retained Earnings 99,000 1,498,000
Total 3,440,500
Less: Treasury Shares 99,000
Shareholder’s Equity 3,341,500

13. Total shares to be reacquired for treasury 2,500

Total Treasury shares sold (including retired) 1,900
Remaining treasury shares were restricted 600
Multiply by selling price per share 90
Appropriation Reserved for Treasury shares 54,000

14. Paid in Capital

Ordinary share capital- 100 Par, 19,400 shares issued
Of which 600 shares are in treasury. 1,940,000
Additional Paid in Capital:
Share Premium- Ordinary 50,000
Share Premium- Treasury Shares 2,500
Share Premium- Stock Retirement 5,000 57,500
Total Paid in Capital 1,997,500
Retained Earnings:
Unappropriated Retained Earnings 1,399,000
Appropriated Retained Earnings 54,000 1,453,000
Total 3,450,500

JOMARK YBAROLA
 Philippine Christian University - Dasmarinas Campus

Less: Treasury Shares 54,000

Shareholder’s Equity 3,396,500

15. Share Capital – Ordinary 1,940,000

16-20 (Journal Entries)

June 15 Cash 50,000

Treasury Shares (500 x 80) 40,000
Paid in Capital from Treasury Shares 10,000

20 Cash (600 x 50) 30,000

Paid in Capital from Treasury Shares 10,000
Retained Earnings 8,000
Treasury Shares (600 x 80) 48,000

25 Ordinary Share Capital (500 x 50) 25,000

Share Premium- Ordinary 3,125
Retained Earnings 11,875
Treasury Shares (500 x 80) 40,000

(Revised Total Stockholders of GHI Corporation)

16. Paid in Capital

Ordinary share capital- 50 Par, 18,500 shares issued
Of which 1,500 shares are in treasury. 925,000
Additional Paid in Capital:
Share Premium- Ordinary 125,000
Share Premium- Treasury Shares 10,000 135,000
Total Paid in Capital 1,060,000
Retained Earnings:
Unappropriated Retained Earnings 1,500,000
Appropriated Retained Earnings 120,000 1,620,000
Total 2,680,000
Less: Treasury Shares 120,000
Shareholder’s Equity 2,560,000

17. Paid in Capital

Ordinary share capital- 50 Par, 19,100 shares issued
Of which 900 shares are in treasury. 955,000
Additional Paid in Capital:

JOMARK YBAROLA
 Philippine Christian University - Dasmarinas Campus

Share Premium- Ordinary 125,000

Share Premium- Treasury Shares 0 125,000
Total Paid in Capital 1,080,000
Retained Earnings:
Unappropriated Retained Earnings 1,492,000
Appropriated Retained Earnings 72,000 1,564,000
Total 2,644,000
Less: Treasury Shares 72,000
Shareholder’s Equity 2,572,000

18. Total shares to be reacquired for treasury 2,000

Total Treasury shares sold (including retired) 1,600
Remaining treasury shares were restricted 400
Multiply by selling price per share 80
Appropriation Reserved for Treasury shares 32,000

19. Paid in Capital

Ordinary share capital- 50 Par, 19,600 shares issued
Of which 400 shares are in treasury. 980,000
Additional Paid in Capital:
Share Premium- Ordinary 121,875
Share Premium- Treasury Shares 0
Share Premium- Stock Retirement 0 121,875
Total Paid in Capital 1,101,875
Retained Earnings:
Unappropriated Retained Earnings 1,480,125
Appropriated Retained Earnings 32,000 1,512,125
Total 2,614,000
Less: Treasury Shares 32,000
Shareholder’s Equity 2,582,000

20. Share Capital – Ordinary 980,000

21. Paid in Capital

18% Cumulative Share Capital – Preference,
authorized to issue 10,000 shares, par
value of 200, issued and outstanding
3,750 shares 750,000
Subscribed Shares- Preference, 1,000 200,000 950,000

JOMARK YBAROLA
 Philippine Christian University - Dasmarinas Campus

Share Capital – Ordinary, authorized to issue

20,000 no par with a stated value
Of 100, issued and outstanding 6,500 shares 650,000
Subscribed Share Capital – Ordinary, 1,500 150,000 800,000
Additional Paid In Capital
Share Premium – Preference 60,000
Ordinary share premium 70,000
Paid in Capital from Treasury shares 10,000 100,000
Donated Share Capital 40,000
Total Contributed Capital 1,890,000
Retained Earnings
Appropriated 20,000
Unappropriated 100,000 120,000
Total 2,010,000
Less: Treasury Shares at cost (10,000+20,000) 30,000
Total Shareholder’s Equity 1,980,000

22. Paid in Capital

18% Cumulative Share Capital – Preference,
authorized to issue 10,000 shares, par
value of 200, issued and outstanding
3,750 shares 750,000
Subscribed Shares- Preference, 1,000 200,000
Less: Subscription Receivable- Preference 0,000 130,000
880,000

Share Capital – Ordinary, authorized to issue

20,000 no par with a stated value
Of 100, issued and outstanding 6,500 shares 650,000
Subscribed Share Capital – Ordinary, 1,500 150,000
Less: Subscription Receivable- Preference 50,000 100,000
750,000
Additional Paid In Capital
Share Premium – Preference 60,000
Ordinary share premium 70,000
Paid in Capital from Treasury shares 10,000
100,000
Donated Share Capital
40,000
Total Contributed Capital
1,770,000
Retained Earnings
Appropriated 20,000
Unappropriated 100,000
120,000

JOMARK YBAROLA
 Philippine Christian University - Dasmarinas Campus

Total
1,890,000
Less: Treasury Shares at cost (10,000+20,000)
30,000
Total Shareholder’s Equity
1,860,000

23. No. of Shares Value

Preference authorized capital 3,750 750,000
Ordinary authorized capital 20,000 2,000,000
Total 23,750 2,750,000

24-26

January 5 Subscription Receivable – ordinary (5,000 x 110) 550,000

Subscribed Share Capital – Ordinary 550,000

Cash (550,000 x 40%) 220,000

Subscription Receivable 220,000

10 Retained Earnings 690,000

Stock dividends Payable 690,000
(25,000 – 1,000 = 24,000 x 115 x 25%)

24. Ordinary Shares 2,500,000

Ordinary Share Premium 500,000
Appropriation Reserved for Treasury shares 80,000
Retained Earnings 750,000
Treasury Shares at cost (80,000)
Total Stockholder’s Equity 3,750,000

Unadjusted shareholder’s equity 3,750,000

Subscribed ordinary shares 500,000
Ordinary Share Premium 50,000
Subscription Receivable (330,000)
Total Stockholder’s Equity 3,970,000

25. The declaration of the stock dividends will not affect the total
shareholder’s equity. Thus considering the Jan 10 transaction alone, the
total stockholder’s equity will still remain the same at 3,750,000

26. The total shareholder’s equity will be the same as number 24. 3,970,000.

JOMARK YBAROLA
 Philippine Christian University - Dasmarinas Campus

27-30 (Journal Entries)

Jan 10 Retained Earnings 414,000

Share Dividends Distributable (3,600 x 100) 360,000
Ordinary share premium 54,000

March 15 Share Dividends Distributable 360,000

Ordinary share capital 360,000

April 15 Treasury shares (1,000 x 80) 80,000

Cash 80,000

June 20 Retained Earnings 532,000

Dividend Payable 532,000

July 15 Cash (500 x 100) 50,000

Treasury Shares (500/2 x 160,000) 40,000
Paid in capital from treasury shares 10,000

27. Ordinary share capital (25,000 x 100) 2,500,000

Ordinary share premium (500,000 + 54,000) 554,000
Appropriation reserves for treasury shares 80,000
Retained Earnings (750,000 – 414,000) 336,000
Treasury shares (80,000)
Share Dividend distributable 360,000
Paid in capital from treasury shares 0
Total Shareholder’s Equity 3,750,000

28. Ordinary share capital (2,500,000 + 360,000) 2,860,000

Ordinary share premium (500,000 + 54,000) 554,000
Appropriation reserves for treasury shares 80,000
Retained Earnings (750,000-414,000-532,000) (196,000)
Treasury Shares (40,000 – 80,000-80,000) (120,000)
Paid in capital from treasury shares 10,000
Legal Capital 3,188,000

29. Number of Shares

Issued Outstanding
Jan 1 25,000 24,000
Jan 10 28,600 27,600
Mar 15 28,600 27,600
Apr 15 28,600 26,600
Jun 20 28,600 26,600

JOMARK YBAROLA
 Philippine Christian University - Dasmarinas Campus

July 15 28,600 27,100

Total 28,600 27,100

30. Outstanding share (25,000 – 1,000 + 3,600 – 1,000) 26,000

Cash Dividend per share 20
Cash Dividend 532,000

TEST II
1. Journal Entries
2014
January 5 Subscription Receivable – ordinary (5,000 x 110) 550,000
Subscribed Share Capital – Ordinary 550,000

Cash (550,000 x 40%) 220,000

Subscription Receivable 220,000

10 Retained Earnings 690,000

Stock dividends Payable 690,000
(25,000 – 1,000 = 24,000 x 115 x 25%)

15 Cash (1,000 x 85) 85,000

Treasury Shares 85,000

March 31 Retained Earnings 600,000

Dividend Payable 600,000

April 30 Dividend Payable 600,000

Cash 600,000

April 20 Treasury Shares (1,500 x 80) 120,000

Cash 120,000

May 16 Retained Earnings 150,000

Scrip Dividend Payable 150,000
(1,500,000 x 10%)

August Scrip Dividend Payable (150,000 x 120/100) 180,000

Cash 150,000
Interest Expense 30,000

2. Stock Dividend 6,000

Scrip Dividend 1,500

JOMARK YBAROLA
 Philippine Christian University - Dasmarinas Campus

Number of shares entitled to dividend 7,500

TEST III

1. Journal Entries
June 10 Treasury Shares (2,000 x 110) P 220,000
Cash P 220,000
Reacquired 2,000 shares at 110 per share

15 Ordinary Share Capital (500 x 100) 50,000

Ordinary Share Premium (50,000/2,000,000 x 50,000) 1, 250
Paid in Capital from Treasury Shares 1,500
Share Premium- Stock Retirement 1,000
Retained Earnings 1,250
Treasury Shares (500 x 110) 55,000
Retired 500 from the treasury shares

20 Cash (500 x 90) 45,000

Retained Earnings 10,000
Treasury Shares (500 x 110) 55,000
500 shares were sold for 90 per share

25 Cash 37,500
Retained Earnings 17,500
Treasury Shares (500 x 110) 55,000
500 shares were sold

30 Retained Earnings (220,000 – 55,000 – 55,000) 55,000

Appropriation Reserved for Treasury Shares 55,000
Remaining treasury shares were restricted

2. Total number of shares entitled to dividends

Beginning 20,000
June 10 (2,000)
June 20 500
June 25 500
Outstanding Shares 19,000

TEST IV (Journal Entry Memorandum Method)

July 1 Authorized to issue 200,000 common stocks, par value of 50 and 150,000
Preferred stock, par value of 200

Subscription Receivable – Preference (12 x 3,000 x 220) 7,920,000

Subscription Receivable – Common (12 x 6,000 x 65) 4,680,000

JOMARK YBAROLA
 Philippine Christian University - Dasmarinas Campus

Subscribed Share Capital- Preference 7,920,000

Subscribed Share Capital- Common 4,680,000

Cash 3,150,000
Subscription Receivable – Preference 1,980,000
Subscription Receivable – Common 1,170,000
To record collections as follows:
Preference (25% x 7,920,000)
Common (25% x 4,680,000)

12 Subscription Receivable – Preference 3,960,000

Subscribed share capital- Preference 3,600,000
Share Premium – Preference 360,000
Received subscription for 18,000 for 18,000 preference share at a
a premium, 220 per share

Cash 990,000
Subscription Receivable – Preference 990,000
Received 50% down-payment

31 Cash 585,000
Subscription Receivable- common 585,000
To record partial collection

Cash 4,725,000
Subscription receivable – Preference 2,970,000
Subscription Receivable – Common 1,755,000
Collection balance due from incorporators

Subscribed share capital – Preference 3,960,000

Subscribed share capital – Common 2,340,000
Share Capital- Preference 3,960,000
Share Capital- Common 2,340,000
To record issuance of certificates

Aug. 10 Cash 371,250

Subscription Receivable- Preference 371,250
To record collection of subscription

20 Cash 1,875,000
Subscription receivable – Preference 1,485,000
Subscription Receivable – Common 390,000
Collection of balances due from incorporators

JOMARK YBAROLA
 Philippine Christian University - Dasmarinas Campus

Subscribed share capital – Preference 1,980,000

Subscribed share capital – Common 780,000
Share Capital- Preference 1,980,000
Share Capital- Common 780,000
To record issuance of certificates

23 Cash 742,500
Subscription Receivable – Preference 742,500
To record collection of subscription

Cash 742,500
Subscription Receivable – Preference 742,500
To record collection of subscription

Subscribed share capital 1,320,000

Share Capital- Preference 1,320,000
Issuance of stock certificate

Sept. 1 Due from the highest bidder 495,000

Subscription receivable – Preference 495,000
To close the balance of delinquent subscription

Due from the highest bidder 4,500

Cash 4,500
To charge the highest bidder for advertising cost

10 Cash 495,850
Due from the highest bidder 495,000
Interest Income 850
To record payment

15 Cash 2,265,000
Subscription receivable – Preference 1,485,000
Subscription receivable- Common 780,000
Collection of balance due from incorporators

Subscribed share capital – Preference 1,980,000

Subscribed share capital – Common 1,560,000
Share Capital- Preference 1,980,000
Share Capital- Common 1,560,000
To record issuance of stock certificates

20 Cash 615,000
Subscribed share capital 615,000

JOMARK YBAROLA
 Philippine Christian University - Dasmarinas Campus

Collection from incorporators

Subscribed share capital- Preference 1,320,000

Preference share Capital 1,320,000
Issuance of stock certificate

TEST IV

1. Preferred stock is non-cumulative

Preferred stock dividend = 8% (100 x 35,000) = 280,000

Preferred stock dividend per share = (280,000/40,000) = 8

Common stock dividend = 900,000 – 280,000 = 620,000

Common stock dividend per share = 620,000/30,000 = 20.67

2. Preferred stock is participating

Preferred stock dividend per share = (900,000/2/35,000) =12. 86

Common stock dividend per share = (900,000/2/30,000) = 15

3. Preferred stock is cumulative

Preferred stock dividend = 8% (100 x 35,000 x 3) = 840,000

Preferred stock dividend per share = (840,000/35,000) = 24

Common stock dividend per share = (900,000 – 840,000 / 30,000) = 2

4. Preferred stock is both cumulative and participating

Preferred stock dividend (in arrear) = 8% (100 x 35,000 x 2) = 560,000

Current year preferred stock dividend (in arrears) = (900,000 – 560,000) /2 =
170,000
Preferred stock dividend per share = (560,000 + 170,000) /35,000 = 20.86

Common stock dividend per share (170,000/ 30,000) = 5.67

TEST V

JOMARK YBAROLA
 Philippine Christian University - Dasmarinas Campus

1. Preferred Stock Non-Cumulative and Fully Participating

Preference
Ordinary
Dividend declared 900,000
Allocation:
Preference shares (2,000,000 x 12% x 1) 240,000 240,000
Ordinary Share (700,000 x 12% x 1) 84,000 84,000
Excess for participation: 576,000
Preference shares (576,000 x 2M/2.7M) 426,666.67 426,666.67
Ordinary Share (576,000 x 700,000/2.7M) 149,333.33
149,333.33
Total 666,666.67
233,333.33

Dividends per share- Preference (666,666.67/10,000 shares) 66.67

Dividends per share- Ordinary (233,333.33/7,000 shares) 33.33

2. Preferred stock is cumulative and fully participating

Preference
Ordinary
Dividend declared 900,000
Allocation:
Preference shares (2,000,000 x 12% x 3) 720,000 720,000
Ordinary Share (700,000 x 12% x 1) 84,000 84,000
Excess for participation: 96,000
Preference shares (96,000 x 2M/2.7M) 71,111.11 71,111.11
Ordinary Share (96,000 x 700,000/2.7M) 24,888.89
24,888.89
Total 791,111.11
108,888.89

Dividends per share- Preference (791,111.11/10,000 shares) 79.11

Dividends per share- Ordinary (108,888.89/7,000 shares) 15.56

3. Preferred stock is cumulative and participating up to 20%

JOMARK YBAROLA
 Philippine Christian University - Dasmarinas Campus

Preference
Ordinary
Dividend declared 900,000
Allocation:
Preference shares (2,000,000 x 12% x 3) 720,000 720,000
Ordinary Share (700,000 x 12% x 1) 84,000 84,000
Excess for participation: 96,000
Preference shares (2,000,000 x (20% -12%) 160,000 160,000
Negative Excess allocated to Ordinary Share (64,000)
(64,000)
Total 880,000 20,000

Dividends per share- Preference (880,000/10,000 shares) 88

Dividends per share- Ordinary (20,000/7,000 shares) 2.86

TEST V

1. Earnings per share = Net Income / Number of Equity Shares

= 125,000 / 15,000
= 8.33 per share

(Number of equity shares = 750,000/50 = 15,000 shares)

2. Return on Equity = Net Income / Shareholder’s Equity x 100

= (125,000 / 1,025,000) x 100
= 12.20%

(Shareholder’s Equity = Capital + Retained Earnings)

(750,000 + 275,000 = 1,025,000)

3. Book Value per Share = Shareholder’s Equity / Number of Shares

= 1,025,000 / 15,000
= 68.33 per share

JOMARK YBAROLA