CHAPTER 23

Problem 23-1
1. Retained earnings 200,000
Retained earnings appropriated for bond 200,000
redemption

2. Bonds payable 1,000,000

Cash 1,000,000

3. Retained earnings appropriated for bond redemption 1,000,000

Retained earnings 1,000,000

4. Retained earnings 750,000

Share capital 750,000

Problem 23-2
1. Retained earnings 5,000,000
Retained earnings appropriated for plant expansion 5,000,000

2. Retained earnings appropriated for plant expansion 3,000,000

Retained earnings 3,000,000

3. Retained earnings appropriated for plant expansion 2,000,000

Retained earnings 2,000,000

Problem 23-3
1. Treasury shares 540,000
Cash 540,000

2. Cash 360,000
Treasury shares 270,000
Share premium 90,000

3. Memo - Issued 47,000 rights to enable shareholders to

purchase
two shares at P140 per share plus one right.

4. Cash 2,800,000
Share capital 2,000,000
Share premium 800,000

5. Retained earnings 1,340,000

 Dividends payable 1,340,000

6. Share capital 200,000

Treasury shares 180,000
Share premium 20,000

7. Profit and loss 540,000

Retained earnings 540,000

8. Retained Earnings 90,000

Retained earnings appropriated for treasury shares 90,000

2. Share Share Retained Treasury

capital premium earnings shares
Balances - January 1 5,000,000 400,000 1,500,000
Acquisition of TS
Reissuance of TS 90,000 540,000
Retirement of TS (200,000) 20,000 (270,000)
Issuance of 20,000 shares 2,000,000 800,000 (180,000)
Dividends declared (1,340,000)
Net income 540,000
Appropriated for TS (90,000)
Balances - December 31 6,800,000 1,310,000 610,000 900,000

Share capital 6,800,000

Share premium 1,310,000
Retained earnings:
Unappropriated 610,000
Appropriated for treasury shares 90,000 700,000
Treasury shares (90,000)
Shareholders' equity 8,720,000

Problem 23-4
1. Treasury shares 550,000
Cash 550,000

2. Cash 420,000
Treasury shares 330,000
Share premium 90,000

3. Retained earnings 1,160,000

Dividends payable 1,160,000
Dividends payable 1,160,000
Cash 1,160,000

4. Memo entry Issued 120,000 new shares with par value of P50 as a result of a 2 for 1
split of 60,000 original shares with par value of P50. There are 4,000 shares in the.
treasury

5. Equipment 260,000
Share capital 200,000
Share premium 60,000

6. Profit and loss 1,730,000

Retained earnings 1,730,000

7. Retained earnings 220,000

Retained earnings appropriated for TS 220,000

Share Share Retained Treasury

capital premium earnings shares
Balances - January 1 6,000,000 500,000 1,800,000
Acquisition of TS 550,000
Reissuance of TS 90,000 (330,000)
Dividends paid (1,160,000
)
Issuance of shares for equipment 200,000 60,000
Appropriated for TS (220,000)
Net income 1,730,000
Balances - December 31 6,200,000 650,000 2,150,000 220,000

Share capital 6,200,000

Share premium 650,000
Retained earnings:
Unappropriated 2,150,000
Appropriated for TS 220,000 2,370,000
Treasury shares, at cost (220,000)
Shareholders' equity 9,000,000

Problem 23-5
1. Cash 5,400,000
Preference share capital 5,000,000
Share premium - preference 400,000
2. Treasury shares 320,000
Cash 320,000

3. Cash 8,500,000
Ordinary share capital 5,000,000
Share premium -ordinary 3,500,000

4. Retained earnings 2,480,000

Dividends payable 2,480,000

Dividends payable 2,480,000

Cash 2,480,000

5. Cash 210,000
Treasury shares 160,000
Share premium - TS 50,000

6. Retained earnings 450,000

Dividends payable 450,000

7. Profit and loss 3,500,000

Retained earnings 3,500,000

8. Retained earnings 160,000

Retained earnings appropriated for treasury shares 160,000

Share Share Retained Treasury

capital premium earnings shares
Balances- January 1 20,000,000 6,000,000 5,000,000
Issuance of 100,000 preference 5,000,000 400,000
shares, P50 par
Acquisition of TS 50,000 320,000
Reissuance of TS 3,500,000 (160,000)
Issuance of 250,000 ordinary 5,000,000
shares, P20 par
Dividends to ordinary share (2,480,000)
Dividends to preference share (450,000)
Net income 3,500,000
Appropriated for TS 160,000 (160,000)
Balances - December 31 30,000,000 54,410,000 5,410,000 160,000
Preference share capital 5,000,000
Ordinary share capital 25,000,000
Reserves 10,110,000
Retained earnings 5,410,000
Treasury shares (160,000)
Shareholders’ equity 45,360,000

Problem 23-6
1. Retained earnings 250,000
Inventory 250,000

2. Retained earnings 1,500,000

Property. plant and equipment 1,500,000

3. Share capital 1,750,000

Share premium 1,750,000

4. Share premium 2,200,000

Retained earnings 2,200,000

Problem 23-7
a. 1. Retained earnings 150,000
Inventory 150,000

2. Note payable 500,000

Accumulated depreciation 1,200,000
Retained earnings 300,000
Equipment 2,000,000

3. Retained earnings 1,200,000

Goodwill 1,200,000

4. Mortgage payable 4,200,000

Preference share capital 4,000,000
Share premium 200,000

5. Ordinary share capital 4,000,000

Share premium 4,000,000

6. Share premium 4,450,000

Retained earnings 4,450,000

2. Statement of Financial Position

ASSETS
Cash 200,000
Accounts receivable 300,000
Inventory 350,000
Property. plant and equipment 7,900,000
Accumulated depreciation (1,900,000)
Total assets 6,850,000

LIABILITIES AND SHAREHOLDERS' EQUITY

Accounts payable 1,100,000
Preference share capital 4,000,000
Ordinary share capital 1,000,000
Share premium 750,000
Total liabilities and shareholders' equity 6,850,000

Problem 23-8
1. Preference share capital 1,500,000
Retained earnings 500,000
Bonds payable 2,000,000

2. Retained earnings 500,000

Goodwill 500,000

3. Property, plant and equipment 4,000,000

Accumulated depreciation 1,000,000
Revaluation surplus 3,000,000

4. Revaluation surplus 2,000,000

Retained earnings 2,000,000

b. Statement of Financial Position

ASSETS
Cash 425,000
Other current assets 1,325,000
Property. plant and equipment 12,000,000
Accumulated depreciation (3,000,000 9,000,000
)
Total assets 10,750,000
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities 2,000,000
Bonds payable 2,000,000
Ordinary share capital 5,000,000
Share premium 750,000
Revaluation surplus 1,000,000
Total liabilities and shareholders' equity 10,750,000

Problem 23-9 Answer A. 1,500,000

Problem 23-10 Answer C. 60,000

Problem 23-11 Answer A. 1,200,000

Problem 23-12 Answer A. 2,745,000

Problem 23-13 Answer A. 280,000

Problem 23-14 Answer A. 4,890,000

Problem 23-15 Answer A. 5,850,000

Problem 23-16 Answer B. 1,900,000

Problem 23-17 Answer C, 3,700,000

Problem 23-18 Answer A. 2,750,000

Problem 23-19 Answer A. 10,000

Problem 23-20
Question 1 Answer C. 4,600,000
Question 2 Answer C. 1,000,000
Question 3 Answer B. 600,000
Question 4 Answer A. 700,000
Question 5 Answer B. 900,000

Problem 23-21 Problem 23-22

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