COMPREHENSIVE PROBLEM

The shareholders’ equity of section of Shinee Company on January 1, 2020 showed the following:

Ordinary share, P100 par, 200,000 shares 6,000,000

authorized, 60,000 shares issued
Share premium 1,200,000
Retained earnings 2,500,000

During the year, Shinee had the following transactions:

a. In February, Shinee reacquired 4,000 shares for P110 per share.
b. In June, Shinee sold 2,000 shares of its treasury share for P120 per share.
c. In September, each shareholder was issued for each share held one stock right to purchase 2 additional ordinary
shares for P130 per share. The rights will expire on December 31, 2020.
d. In October, 10,000 stock rights were exercised when the market value of the ordinary share was P160 per share.
e. On December 15, 2020, Shinee declared its first cash dividend to shareholders of P15 per share, payable on
January 14, 2021, to shareholders on record on December 31, 2020.
f. On December 23, Shinee formally retired 1,000 treasury shares.
g. Net income for the year is P1,100,000.
h. Appropriated retained earnings equal to the cost of treasury shares.

Determine the balances of the following as of December 31, 2020:

1. Ordinary share capital
2. Share premium on treasury shares
3. Total share premium
4. Retained earnings unappropriated
5. Total shareholders’ equity.

Ordinary shares Share premium - Treasury shares Share premium - Retained earnings
OS TS
6,000,000 1,200,000 2,500,000
a. 440,000
b. (220,000) 20,000
c.
d. 2,000,000 600,000
e. (1,170,000)
f. (100,000) (20,000) (110,000) 10,000
g. 1,100,000
h.
7,900,000 1,780,000 110,000 30,000 2,430,000

Share premium - OS 1,780,000

Share premium - TS 30,000
Total share premium 1,810,000

Ordinary shares 7,900,000

Share premium - OS 1,780,000
Treasury shares (110,000)
Share premium - TS 30,000
Retained earnings 2,430,000
Total SHE 12,030,000