Auditing and Assurance:

Specialized Industries
M12 Group Work

GROUP 6

MARCELLANA, ARIEL

MARQUEZ, LADY DIANA

MASCULINO, ZENY ROSE

MENDOZA, ARNIE

MENDOZA, JESSEL ANN

BSA-31
M12 AUDITING RETAINED EARNINGS & DIVIDENDS

GROUP WORK

The accounts from the shareholders' equity section of the balance sheet of Western Company
showed the following at December 31, 2020:

Ordinary share ..........................................P 475,000

Share Premium ...................... 6,650,000

Retained Earnings .....................................787,500

Western issued 475,000 shares of the P1 par value Ordinary share on January 1, 2020.

The company also is authorized to issue 500,000 shares of P5 par value, 6% preferenceshare.

During 2021, Western had the following transactions:

Jan. 10 Issued an additional 90,000 shares of Ordinary share at P17 per share.

Apr. 1 Issued 100,000 shares of preference share at P8 per share.

July 19 The board of directors authorized the appropriation of P295,000 of retained earnings for
the purchase of equipment.

Oct. 23 Sold an additional 60,000 shares of preference share at P9 per share.

Dec. 31 Net income for the year was P1,200,000. The board of directors declared a dividend of
P623,000 to shareholders of record on January 15, 2022, to be paid on February 1, 2022.

Prepare a statement of changes in shareholders' equity for 2021 using the information given
above.
ANSWERS:

Western Company

Statement of Changes in Stockholders' Equity

For the Year Ended December 31, 2021

Preferred Paid in Common Paid in Retained Total

Stock Capital In Stock Capita In Earnings
Excess of Excess of
Par Par

Balances, P -0- P -O- P 475,000 P 6,650,000 P 787,500 P 7,912,000

Dec. 31,
2020

Jan. 10: 90,000 1,140,000 1,530,000

Issued
90,000

common at
P17

Apr. 23: 500,000 300,000 800,000

Issued
100,000

preferred at
P8

Oct 23: 300,000 240,000 540,000

Issued
60,000

preferred at
P9
Dec. 31: 1,200,000 1,200,000

Net income
for 2021

Cash (48,000) (48,000)

dividends:

Preferred:
P.30 x
160,000

Common: (575,000) (575,000)

P1.00 x
575,000

Balances,
Dec 31,
2021

Total P 800,000 P 540,000 P 565,000 P 8,090,000 P 1,364,500 P

11,359,500