INVESTMENT IN UNQUOTED SECURITIES 1

On January 1, 20A, AA Company purchased 50,000 shares of BB Company at P120 per share. Brokerage fees amounted to P190,000
A P4.40 dividend per share on December 30 of the previous year, payable on February 28, 20A to shareholders of record on January
15, 20A. on March 31, 20A, a 20% share dividend was declared and immediately distributed by BB Company when the carrying amount
per share on BB’s book was P110 and the market value per share was P115.

On May 31, 15,000 shares were sold at P105.50, net of P4.50 selling cost. After a month, BB Company issued rights to all shareholders
allowing them to subscribe to its stock, the ownership of 5 shares entitling the shareholders to subscribe for an additional share at P80.
On such date, BB’s market value per share was P115 and P25 per right. AA’s receipt of the stock rights was not accounted separately.

On July 15, 20,000 rights were sold at P27 a right and the remaining was formally exercised. At the end of the month of July, the BODs
of BB Company passed a resolution to the effect that the shareholders shall contribute P5 for each share held to BB Company followed
by a declaration of 2-for-1 share split on July 15. On October 1, AA Company receives 5,000 shares in lieu of P2.50 cash dividend,
when the market value per BB’s share was P35. Half of the shares held by AA Company was sold at P37.50 by the end of 20A. AA
used the AVERAGE method. Prepare all the necessary entries based on the aforementioned.

Entr y
No . De s c r iption Da te No. of s ha r e s Co s t P e r S ha r e Tota l Co s t
Pur @ 1 -1-2 0A 50 ,000.00 12 9.0 0 6,450,000.0 0
1 Br o k Fe e 1 -1-2 0A 1 90,00 0.00
Div On 1 -1-2 0a - 2 20,00 0.00
50 ,000.00 12 8.4 0 6,420,000.0 0
2
S h a r e div 3 -31-20A 10 ,000.00
60 ,000.00 10 7.0 0 6,420,000.0 0
3
S a le 5 -31-20A - 15 ,000.00 - 1,605,000.0 0
45 ,000.00 4,815,000.0 0
4
SR 6 -30-20A m e mo e ntr y (n ot a c c ou nte d s e pa r te ly)
45 ,000.00 4,815,000.0 0
5
S a le of S R 7 -15-20A - 5 40,00 0.00
45 ,000.00 9 5.00 4,275,000.0 0
6
Exe r S R 7 -15-20A 5 ,000.00 4 00,00 0.00 s u bs @ s u bs c r iption pr ic e
50 ,000.00 9 3.50 4,675,000.0 0
7
As s e s s me nt 7 -31-20A 2 50,00 0.00
8 S h a r e s plit 7 -31-20A 10 0,0 00.0 0
15 0,0 00.0 0 3 2.83 4,925,000.0 0
9
S h a r e in lie u of c a s h 1 0-1-20A 5 ,000.00 35.00 1 75,00 0.00
15 5,0 00.0 0 3 2.90 5,100,000.0 0
10
S a le 1/2 1 2-31-20 A - 77 ,500.00 - 2,550,000.0 0
77 ,500.00 3 2.90 2,550,000.0 0

Go back to the given summary and reconstruct the entry based from the table above.

INVESTMENT IN UNQUOTED SECURITIES 2

On July 1, 2011, ABCD acquired 40,000 ordinary shares of XYZ Company with P20 par value, at P30 a share. Two days before ABCD
obtained XYZ shares, the investee’s board of directors declared 10% semi-annual dividends to shareholders’ of record on July 15,
2011, which was paid at the end of July. Brokerage and adviser’s fees amounted to P20,000. The shares acquired by ABCD represent
10% of XYZ’s outstanding shares. IES 1,140,000 Div. Income 80,000; Cr. Cash 1,220,000

On September 31, 2011, XYZ declared 20% stock dividends to shareholders of record at October 15, 2011. These shares were
distributed on October 31, 2011. The market value of the shares on the date of declaration was P22. Received 8,000 shares
representing 20% stock dividend on 40,000 shares held. Shares now held 48,000

Pre-emptive rights were declared and issued in the middle of November 2011, granting ABCD the legal right to subscribe 1/2 additional
new share of XYZ for every two rights issue at par. The quoted market price of the shares right-on is P30. ABCD accounted for the
rights received separately. The share rights will expire on the 6th month from the date they were issued. Amount to be allocated to
stock rights is P96,000. If accounted separately, Dr. SR 96,0000 Cr. Investment 96,000.

On December 1, 2011, ABCD exercised half of the share rights received, and then sold half of the unexercised rights for P6 per right at
the end of 2011. The BOD of XYZ declared 10% semi-annual dividend or P2 per share to shareholders of record on January 15, 2012,
payable on January 31, 2012. Dr. Investment 168,000 Cr.SR 48,000 Cr. Cash 120,000 (48,000SR/2/4xP20) To record the sale Dr.
Cash 72,000; Cr. SR 24,000 Cr. Gain 48,000 / DR/ Cash 108,000 Div Income 108,000.

ABCD was notified by an insider that XYZ will declare share dividends on June 1, 2012, ABCD immediately exercised the remaining
share rights on March 1, 2012. On May 1, a month earlier than expected, XYZ declared 20% bonus issue but in the form XYZ’s
preference shares. On the date of declaration, the market value of the XYZ’s ordinary share is P35 while the market value of XYZ’s
preference share is P15. Dr. Investment 84,000; Cr. Cash 60,000 Cr. SR 24,000; Investment in PS 102,316; Cr. Investment in OS
102,316

At the end of 2012, ABCD received P25 per share in lieu of 20% stock dividends. Cash 285,000; Cr. Inv 198,930; Cr. Gain 86,070

On July 1, 2013, the share was split down 2-for-1 and on August 30, ABCD sold half of the total shares held for P31 a share, paying
P50,000 brokerage commission and taxes. Received 28,500 news shares in exchange for the 57,000 old shares/ Cash (14,250*31
– 50,000) Dr. loss 105,575; Cr. Investment 497,325
Prepare the entries to record the aforementioned transactions related to the investment account AND determine the balance
afterwards.

Go back to the given summary and reconstruct the table based on the entries provide above.

INVESTMENT IN UNQUOTED SECURITIES 3

The Stock Investment account of YAP, Inc. showed the following details:
STOCK INVESTMENT
1/01 Beg. bal. (2,000 shrs) 40,000 2/28 Cash dividend 1,000
3/31 Purchased 300 shrs 4,500 4/01 Sale of stock rights 3,000
6/30 Sale of 230 shares 5,000
Given the data above, answer the following:
1. A cash dividend of P0.50 per share was received on Feb. 28. The adjusting entry is: dr. Stock Inv 1,000; cr. Div Income
2. On March 15, stock rights were received entitling shareholders to purchase one share for every five rights held at P15 per share.
Market values on this date were: shares, P20; rights, P5. Yap accounted the stock rights separate from the stock investment. The
adjusting entry to recognize the cost allocated to the stock rights is: dr. SR 10,000; cr. Stock inv 10,000
3. On March 31, 300 shares were purchased due to the partial exercise of the stock rights. The adjusting entry, after the adjustment
in No. 2 above has been effected, is Dr. Stock Inv Cr. SR 7,500
4. On April 1, the remaining rights were sold for P3,000. The adjusting entry is: Dr. Stock Inv 3000 Cr. SR 2,500 Cr. Gain 500
5. On June 30, 230 shares were sold for P5,000 (use average cost method). The adjusting entry is Dr. Stock Inv 800 Cr. Gain 800

En tr y
No . De s c r iptio n Da te No . o f s h a r e s Co s t P e r S h a r e To ta l Co s t
Pur @ 1 -1-2 0 A 2 ,00 0 .0 0 2 0 .0 0 4 0 ,0 0 0 .0 0
1 Br o k Fe e
Div On
2 ,00 0 .0 0 2 0 .0 0 4 0 ,0 0 0 .0 0
S h a r e div
2 ,00 0 .0 0 2 0 .0 0 4 0 ,0 0 0 .0 0
S a le
2 ,00 0 .0 0 4 0 ,0 0 0 .0 0
2
SR 3 -15 -2 0 A - 1 0 ,0 0 0 .0 0 a c c o u n te d s e p a r a te ly; @ FV o f S R
2 ,00 0 .0 0 3 0 ,0 0 0 .0 0
S a le o f S R
2 ,00 0 .0 0 1 5 .0 0 3 0 ,0 0 0 .0 0
3
Exe r S R 3 -31 -2 0 A 3 0 0 .0 0 1 2 ,0 0 0 .0 0 Ca s h + FV o f e q u i S R e xe r c is e d
2 ,30 0 .0 0 1 8 .2 6 4 2 ,0 0 0 .0 0
As s e s s me n t
S h a r e s p lit
2 ,30 0 .0 0 1 8 .2 6 4 2 ,0 0 0 .0 0
4
S h a r e in lie u o f c a s h -
2 ,30 0 .0 0 1 8 .2 6 4 2 ,0 0 0 .0 0
5
S a le 1 /2 6 -30 -2 0 A - 2 3 0 .0 0 - 4 ,2 0 0 .0 0
2 ,07 0 .0 0 1 8 .2 6 3 7 ,8 0 0 .0 0

INVESTMENT AT COST WITH ERRORS 4 (ASSIGNMENT) Submit in moodle platform

On January 1, 2015, ABC purchased 20,000 shares on XYZ, P100, at P110 per share. This was debited to the investment account. On
March 1, 2015, XYZ issued right to ABC, each permitting the purchase of ¼ share at par. No entry was made. The bid price of the
share was 140 and there was no quoted price for the rights.

On April 1, 2015, ABC paid for the new shares charging the payment to the investment account. Since ABC felt that it had been
assessed by XYZ, the dividends received from XYZ in 2015 and 2016 (10% on December 31 of each year) are credited to the
investment account until the debit was fully offset.

On January 1, 2017, ABC received 50% stock dividend from XYZ. On the same date, the shares received as stock dividend were sold
at P160 per share and proceeds were credited to income. On December 31, 2017, the shares of XYZ were split 2 for 1. ABC found that
each new share was worth P5 more than the P110 paid for the original shares.

Accordingly, ABC debited the investment account with the additional shares received at P110 per share and credited income. On June
30, 2018, ABC sold one-half of the investment at P92 per share and credited the proceeds to the investment account.

Analyze the accounting procedures carried out by ABC to account the aforementioned investment-related transactions. Prepare the
necessary adjusting entries on December 31, 2018, assuming, stock rights are to be accounted for separately, and, average method is
used for valuing each unit of stock investment.

Support your entries with a table similar above. Submit a picture of your hand-written solution.