Pr

oblem Sol
vi
ng–Retai
nedEar
nings(Di
vidends,
Appr
opri
ati
on,
andQuasi
-r
eorgani
zat
ion)
1. OnDecember31,
2015,ZebraCompanyshowed di
vi
dendofi
nvent
orypay
abl
eonMar
ch1,
2016.
t
hefol
lowi
ngshar
ehol
ders’equi
ty:
Theinv
ent or
yhadaP1, 200,000carry
ingamount
Sharecapi t
al,
P100par,100,000shares andaf airval
ueofP1, 500,000onJul y1,2015,
authori
zed,50,
000sharesissued P1,
800,000 Po5
n,
000
D,
e0c
0e
0mber 31, 2015 and
Sharepr emium P2,
000,000onMa
1,
00
rc
0h1
,00,
02016.
Retainedearnings 2,
000,000
Treasuryshares,5,
000atcost Thenetincomef6
o0r
02
,00
10
5wasP3, 000,
000.

On December 31, 2015, Zebr a Company Requir

ed:
declar
edacashdi vi
dendofP30pershareto Preparejour
nalent
ri
esf or2015 and 2016 i
n
sharehol
der
sofr ecor
donJanuar
y15,2016and connecti
on with tr
easury shar
es, propert
y
payableonJanuary31,2016. di
v i
dendandneti
ncome.

Requir
ed: 4. OnOct ober1,2015,Gr
eeceCompanydeclar
eda
Prepar
ej ournalent
ryon December31,2015, proper
tydivi
dendofmachi nerypayabl
eonApri
l
January15,2016andJanuar
y31,2016. 1,2016.Thecar r
yingamountoft hemachi
nery
i
s P4, 000,
000 on Oct ober 1, 2015. The
2. CandelCompanyowned10,
000shar
esofequit
y machineryhadthefoll
owingfai
rval
ue:
secur
it
ies of XYZ Company wit
h carry
ing
amountofP90pershar
e. October1,2015 3,
800,
000
December31, 2015 3,
700,
000
OnOctober31,2015,CandelCompanydecl
ared Apri
l1,2016 3,
500,
000
t
hesesharesaspropert
ydividendt
obepaidon
March31,2016. Requir
ed:
Prepar
ej our
nalentr
ies f
or 2015 and 2016
The quoted pr
ice f
orXYZ shar
eis P130 on connecti
onwit
hthepr
opert
ydi
vidend.
October31,2015,P150onDecember31,2015
andP110onMar ch31,
2016. 5. OnJanuar y1, 2015, EasyCompanyhador dinary
and pr eference shar es out standing. The
Requir
ed: i
ncor poratorsoror iginalshar eholder sownt en
Prepar
ejournalent
ri
esi
nconnect
ionwi
tht
he ordi
nar yshar e butno pr ef
erence shar es.On
proper
tydi
vi
dend. December 31, 2015, t he ent i
ty decl ared
divi
dendsont heor dinar ysharepay ableonJul y
3. Lei
lanie Company r epor
ted t
he foll
owi
ng 1,2016.Theent it
ydeci dedt ogi vet heor dinary
sharehol
der
s’equi
tyonJanuar
y1,
2015: shareholdersachoi cebet weenr eceivi
ngcash
divi
dendofP500, 000pershar eorapr oper t
y
Sharecapi
tal divi
dendi nt h
Pef
1,
5 o
0r
0m
,00o0fanoncashasset .The
Sharepremium noncashasset 3i
,
sas
000, 0
ta
0 n
0dardmodelf r
om t hecar
Retai
nedearni
ngs fl
eet.Eachcar 5h
,
0a0
saf
0,00a0irval
ueofP600, 000and
carry
ing amount of P400, 000. The ent it
y
Theentit
yhad400,000aut
hor
izedshar
esofP5 esti
mat edt hat80%oft heordinaryshar ehol ders
parval
ue,ofwhich300,
000shareswer
eissued will
taket heopt ionoft hecashdi v
idendand20%
andoutstandi
ng. will
electfort henoncashasset .

OnMarch1,2015,theenti
tyacqui
red50,000 Requi
red:
shar
esf
orP10pershar
etobehel
dast r
easury
. 1. Prepar
ej ournalentri
esf or2015and2016
assumingtheshar eholdershav
echosent
he
The shar
es were ori
ginall
yissued atP8 per cashalt
ernative.
share.The ent
it
y used t he costmethod to 2. Prepar
ej ournalentri
esf or2015and2016
accountf
ort
reasuryshares. assumingtheshar eholdershav
echosent
he
noncashalternat
iveandt hefai
rval
ueoft
he
OnJul
y1,2015,t
heent
it
ydecl
aredapr
oper
ty
 Pr
oblem Sol
vi
ng–Retai
nedEar
nings(Di
vidends,
Appr
opri
ati
on,
andQuasi
-r
eorgani
zat
ion)
cardidnotchange. Requir
ed:
6. ValerieCompanyshowedt hef oll
owingdata: Foreachoft hef ol
lowi ng,preparejournalentr
ies
Shar ecapit
al,
parvalueP100, onthedat eofdeclar ati
onanddat eofpay ment:
50,000shar esi
ssued P5,
000,000 a. A10%or dinaryst ockdividendisdecl ar
edon
Shar epremium 200,000 ordinaryshare.
Retainedearnings 2,
000,000 b. A50%or dinaryst ockdividendisdecl ar
edon
Mar ketval
ueofshar eondeclarati
ondateP150 ordinaryshare.
Mar ketval
ueofshar eondist
ributi
ondate 170 c. A10%or dinaryst ockdividendisdecl ar
edon
bothor di
naryandpr eferenceshares.
Requir
ed: d. An or dinary st ock div i
dend i s declared
Foreachofthefol
l
owi ng,
preparejour
nalentri
es wher eby each or dinar
y shar eholdershall
onthedateofdecl
arati
onanddat eofpayment : receive one or dinaryshar ef orev eryfive
a. A20%st ockdi
videndisdecl
ared. sharehel d.
b. A10%st ockdi
videndisdecl
ared.
7. NikkoCompanyshowedt hefol
lowingbalances: Inv
iewoft
herati
oofnewshar est
ool dshar
es.I
tisn
warr
ant
sbeissuedtov ar
ioussharehol
ders
Shar ecapi talauthorizedP100par , cal
l
ingf
or3,
000shares.
50,000shar es P5,000,
000
Shar escapi talunissued,20,000shares Onl
y90% oft hew
2, ar
r
000,
0a
0n
0t
sar
etur
nedi
nandt
he
Subscr i
bedshar ecapi tal
,10,000shares r
eminderl
apsed.
1,000,
000
Treasur yshar es( 5,
000atcost ) 600,
000
Shar epremi um 9. Nati
onal Compa
5n
0y
0,
00p
0r
ovi
ded t
he f
oll
owi
ng
Retainedear nings t
ransact
ions:1,
500,
000
Mar ketv alueofshar e:
Ondecl arationdate 2015 140
Oni ssuancedat e Sept
.15 Decl
areda2
150 0% stockdivi
dendon
100,
000shares,parval
ueP10.The
Required: shar
eswereorigi
nal
lysol
dat15.
Prepar ejournalentri
esassumi ngt heBoar dof
Directorsdeclared: Oct.15Di
stri
butedt hestockdi vi
denddecl ared
1. A st ock di vi
dend fr
om uni ssued shar e on Sept ember15 whi ch i ncl
uded
capitalofoneshar eforeach t en shares fracti
onal war r
ants f or P2, 000
shares.
outstanding.
Dec.1 Onet housandfi
vehundr edshar eswer e
2. Ast ockdi v
idendfr
om thetreasurysharesof
i
ssuedf orf
ractionalwar rants.The
oneshar eforeachtenshar esout st
anding.
remainingwarrantsexpired.
The cost of t he treasury shar es i s
capital
ized. 2016
Sept
.15 Decl
ared scrip di
vi
dend ofP2 per
8. Mi
chel
l
eCompanyshowedt
hef
oll
owi
ngdat
a: shar
e pay able on November 15,
2016wit
hi nter
estat12%.
Preferenceshar ecapital
,parv al
ueP20,
100,000shar esaut hor
ized,50,000 Nov
.15Pai
dthescr
ipdi
vi
dend
sharesissued 1,
000,
000
Ordinaryshar ecapi t
al,parvalueP10, Dec.1 Decl
aredadivi
dendof1shar eofSharp
200,000shar esaut hor
ized, CompanyoneveryshareofNati
onal
100,000shar esissued 1,
000,
000 Companyshares are car
ri
ed ata
Retainedear nings 2,
000,
000 costofP3pershar
eandt hemarket
Mar ketvalueofshar eondat eofdeclar
ati
on: val
ueofP4pershare.
Preferenceshar e 30
Or di
naryshar e 15 Dec.31Di
str
ibut
edtheSharpCompanyshar
es
t
osharehol
der
s.Themarketval
ue
 Pr
oblem Sol
vi
ng–Retai
nedEar
nings(Di
vidends,
Appr
opri
ati
on,
andQuasi
-r
eorgani
zat
ion)
ofShar
pCompanyshar
eisP6. Howev er,the management of t he entit
y
authori
zed that prov
isi
on be made i
n t he
Requir
ed: accountsforanypossibl
elossupt
oP500,000.
Prepar
ejour
nal
ent
ri
est
orecor
dthet
ransact
ion. Thesui twassettledin2016andpaymentof
P200,000wasmade.
10.Ori
ent
al Company showed t
he f
oll
owi
ng
bal
ancesaty
ear
-end: Required:
Preparejournalentri
estorecord:
Wastingasset 8,
000,
000 a. The pr ovi
sion l osses aut hori
zed by
Accumulateddeplet
ion 1,
000,
000 managementi n2015.
Sharecapit
al,P100par 5,
000,
000 b. Pay mentmadei n2016
Capit
alli
quidated 500,
000 c. Cancel ati
on oft he provi
sion forpossi
ble
Retai
nedear ni
ngs 1,
200,
000 l
ossin2016.

TheBoardofDir
ect
orsdecl
aredadi
vi
dendof 13.The board ofdi
rect
ors ofMazda Company
P30pershar
eaty
ear
-end. deci
ded to embark on a subst
ant
ialpl
ant
expansi
on.
Requir
ed:
Preparej
ournalent
ryforthedeclar
ati
onoft
he Todemonst rat
etheneedt oretainasset
sinthe
di
v i
dendandthesubsequentpay
ment. ent
ity
,theboar dagr
eedonDecember31,2015
to author
ized an appr opr
iat
ion of retai
ned
ear
nings int he amount of P5, 000,
000,the
ant
ici
patedcostofplantexpansion.
11.Asar esul
tofanagr eementwi t
hbondholders,
Mali
ce Company i sr equi
red to appr
opri
ate The pl ant was par ti
all
y constr
uct
ed on
ear
nings of P200,
000 at t he end of each December31,2016,andt heboar
ddecidedto
cal
endaryearf
ortheyears2011to2015. reducetheappropr
iat
ionbyP3,00,
000,t
hecost
i
ncurredtodat
e.
Atthebeginningof2016,uponli
quidat
ionofthe
bonded i ndebtedness of P1, 000,
000, the Fi
nal
l
y ,i
nJuly2017,t
hepl
antwascomplet
ed
ret
ainedearni
ngsappr opr
iat
ioni
scanceled. andtheremaini
ngpor
ti
onoft
heappr
opri
ati
on
wasremoved.
Thisisf
oll
owedbythedecl
arat
ionandtheissue
ofa30%st ockdi
vi
dendon250,000out
standing Requir
ed:
shareswit
hP10parv al
ue.Themarketval
uei s Preparejour
nalentr
iestor ecor
d,r
educeand
P15pershare. fi
nall
yremovetheappropr
iat
ion.

Requir
ed: 14.Susa Company di scl
osed the foll
owi
ng
1. Prepare jour nal entry f or t he annual shar
ehol
der
s’equi
tyonJanuar
y1,
2015.
appropri
ati
onofr etainedear nings.
2. Preparejournalentryforthepay mentofthe Share capi tal
, P100 par, 100,
000 shar
es
bondspay able. authorized,
50,000shar
esi
ssued
3. Preparejournalentryf orthecancel at
ionof Sharepr emium
theappropri
at i
on. Retainedearnings
4. Preparejournalentryforthei ssuanceofthe
stockdivi
dend. Duri
ng the currenty ear
,t he entit
y had the
fol
l
owingtransacti
on:
12.Suit
s f or damages t otal
i
ng P500,000 are 1. The February,the ent
ityr eacqui
red 6,
000
pendingagai
nstSonyCompanyonDecember31, sharesforP90pershare.
2015.Counselfortheenti
tyadv i
sedt
hatl
osses 2. InJune,theent i
tysold3, 000sharesofi t
s
onsuchsuitsarenotprobable. tr
easuryforP120pershar e.
3. InSeptembereachshar eholderwasissued
 Pr
oblem Sol
vi
ng–Retai
nedEar
nings(Di
vidends,
Appr
opri
ati
on,
andQuasi
-r
eorgani
zat
ion)
4. In Oct ober, 10,000 st ock rights were
exerci
sedwhenmar ketv aluewasP150per Requir
ed:
share. a. Preparejournalent
ri
estogi
veeffecttot
he
5. OnDecember15,2015,t heenti
tydeclar
ed reorgani
zati
on.
thef i
rstcashdi v
idendt oshar ehol
dersof b. Presenttheshar ehol
der
s’equi
tyaftert
he
P20pershar e,payableonJanuar y10,2016, reorgani
zati
on.
toshar eholder
sofr ecordonDecember31,
2015. 16.Subi
c Company has suf f
ered subst
ant
ial
6. OnDecember15,2015,t heentit
yf or
mally oper
ati
ngl
ossesf
orsev
eral
years.
ret
ir
ed2, 000t r
easuryshar es.
7. Net income f or t he cur r
ent year was Theenti
ty’
sabil
it
ytoservi
ceit
sdebit
sandpay
oper
ati
ngexpensehasbeenimpai
red.
P540,000.
8. Appropr i
atedretai
nedear ningsequaltothe
Consequent
ly,t
heowner s,and cr
edi
torshav
e
costoft r
easuryshar es.
deci
dedtoexecuteaquasi-
reor
gani
zat
ion.

Required: The st
atementoff
inanci
alposi
ti
on ofSubi
c
a. Pr epare journal entri
es to recor
d t he CompanyonDecember31,2015pr i
ortothe
transacti
on. reor
gani
zati
oni
sasf
oll
ows:
b. Pr epareast at
ementofchangesinequit
yfor
they earendedDecember31, 2015. ASSETS
c. Pr esent t he shar ehol
der
s’ equit
y on Cash200,000
December31, 2015 Accountsrecei
vable
I
nv ent
ory
15.Cur
rent condi
ti
ons warr
ant t
hat t
he Peach Propert
y,pl
antandequipment
Companyshouldunder
goaquasi
-r
eor
gani
zat
ion Accumulateddepreci
ati
on
onDecember31,2015. Goodwill

Selectedi temspr iortothequasi -

reorganizati
on LI
ABI LITIESANDSHAREHOLDERS’ EQUITY
are: Account spay able
1. Inv entor ywas r ecor
ded on December31, Notepay abl
e
2015, atcostofP3, 250,000.Thef ai
rvalueof Mor tgagepay able
theinvent orywasP3, 000,000 Ordinaryshar ecapit
al,
P100par,50,
000shares
2. Pr oper ty, plant, and equi pment wer e Sharepr emi um
Retainedear nings
recorded at December 31, 2015, at
Total l
iabil
it
iesandsharehol
der
s’equit
y
P6,000, 000 net of t he accumul at
ed
depreci ati
on.Thef airvalueoft heproper t
y
Theent i
typr ovi
dedt hef ol
lowinginformati
onin
wasP5, 000,000 rel
ati
ont ot hequasi-reorganizati
on:
3. Theparv alueoft heshar ecapitali
st obe 1. An i ndependentappr aisaloft he enti
ty’
s
reducedf r
om P10t oP5pershar e. inventor y reveals goods wi th carryi
ng
amountofP150, 000 t o be obsolet
e and
Shar
ehol
der
s’equi
tyconsi
der
edof
: wor t
hless.
2. Equipment cost ing P2, 000,000 and with
Sharecapital
,parv al
ueP10pershare,
accumul at
eddepr eciati
onofP1, 200,
000is
Authori
zed,issuedandoutst
anding
expect edtobesol dforP300, 000.
350,000share 3,500,000

Sharepr
emium However
,the
8 h
00,ol
d
00eroft
0 he not
e pay
able
Retai
nedear
nings(
def
ici
t) agr
ees to(acc
450,eptt
000) he equi
pmentin ful
l
sat
isf
act
io3
no
,fth
850,e n
000ot
e.
4. Theresult
ingdefi
citbalancei
stobeof
fset
3. Thegoodwi
l
list
obewr
it
tenof
fasl
oss.
agai
nstthesharepremium.
 Pr
oblem Sol
vi
ng–Retai
nedEar
nings(Di
vidends,
Appr
opri
ati
on,
andQuasi
-r
eorgani
zat
ion)
4. The mor tgage hol der agrees to accept 1. Preparejournalent r
ies to gi
ve eff
ectt othe
40,000newpr efer
enceshareswi t
hP100par reorgani
zat
iononDecember31, 2015.
valueinsati
sf acti
onoftheli
abili
ty. 2. Prepare a statementoff i
nanci
alpositi
on on
5. The parv alue oft he or
dinary shar
ei s December31, 2015aftert
hereorgani
zat
ion.
reducedtoP20.
6. Ther esult
ing def i
citisoffsetagainstthe
sharepremi um.

Requir
ed:
a. Preparejournalent r
iestogi v
eef fectt
othe
quasi-
reorganizati
on.
b. Prepare a statementoff inanci
alpositi
on
immedi at
elyafterthereorganizat
ion.

17.Bacolod Company appr oved t he f ol

lowing
reor
ganizat iononDecember31, 2015:
1. The pr eference shar e capitali st o be
exchangef orP2, 000,000of10% debent ure
bonds.
2. Goodwi l
l i
st obewr itt
enoff.
3. The pr oper ty
,pl ant and equi pment ar e
appr aised by i ndependent exper t at a
replacementcostofP12, 000,000.TheSEC
appr ov ed t he r evaluati
on oft he property
,
plantandequi pmentt ogiveef fecttot he
reorgani zation.
4. Ther esul ti
ngdef ici
ti stobeof f
setagainst
ther eval uationsur plus.

Stat
ementoff
inanci
alposi
ti
ononDecember31,
2015

Assets
Cash 425,000
Othercurrentasset
s 1,325,000
Propert
y,plantandequi
pment 8,000,000
Lessaccumul ateddepr
eci
ati
on (
2,000,000)
Goodwi l
l 500,000
Totalassets 8,250,000

Li
abi l
iti
esandshar eholders’Equi
ty
Currentliabil
it
ies 2,000,000
Preferenceshar ecapital,
12%cumul at i
v e,
P100par 1,500,000
Ordinaryshar ecapital
,50,000share,
P100par 5,000,000
Sharepr emi um 75,000
Retainedear nings (1,000,000)
Totalliabil
i
tiesandshar eholders’
equity
8,
250, 000
Requi
red: