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Accounting For Partnership and Corporation Solman Baysa Lupisan 2014 Chapter 9
Accounting For Partnership and Corporation Solman Baysa Lupisan 2014 Chapter 9
CHAPTER 9
Operations, Dividends, Book Value and Earnings per Share
E 9-1
Contributed Capital:
10% Preference Share Capital, P100 par, cumulative, 10,000 shares
authorized, 4,000 shares issued and outstanding P 400,000
Ordinary Share Capital, P20 par, 100,000 shares authorized,
50,000 shares issued and outstanding 1,000,000
Ordinary Share Capital Subscribed – 10,000 shares 200,000
Preference Share Premium 150,000
Ordinary Share Premium 200,000
Total Contributed Capital P1,950,000
Retained Earnings 250,000
Total Shareholders’ Equity P2,200,000
E 9-2
Contributed Capital:
10% Preference Share Capital, P40 par, 40,000 shares authorized,
20,000 shares issued and outstanding P800,000
Preference Share Capital Subscribed P40,000
Less PSC Subscription Receivable 14,000 26,000
Ordinary Share Capital, P10 stated value, 500,000 shares authorized,
200,000 shares issued and outstanding 2,000,000
Paid-in Capital in Excess of Par – Preference Shares 120,000
Paid-in Capital in Excess of Stated Value – Ordinary Shares 100,000
Total Contributed Capital P3,046,000
Retained Earnings 400,000
Total Shareholders’ Equity P3,446,000
E 9-3
Mar. 1 Retained Earnings 400,000
Dividends Payable 400,000
40,000 sh x P10 = P400,000
E 9-4
Apr. 1 Retained Earnings 200,000
Dividends Payable 200,000
100,000 sh x P2
E 9-5
1. Retained Earnings 1,875,000
Stock Dividends Distributable 750,000
PIC from Stock Dividends 1,125,000
500,000 sh x 15% x P25 = P1,875,000
500,000 sh x 15% x P10 = P 750,000
E 9-6
Mar. 15 Retained Earnings 10,000
Dividends Payable 10,000
2,000 sh x P5 = P10,000
E 9-7
Annual PSC dividend requirement – 100,000 sh x P100 x 12% = P1,200,000
1.
2007 2008 2009
Preference P1,200,000 P1,200,000 P1,200,000
Ordinary 1,300,000 2,300,000 5,300,000
Total P2,500,000 P3,500,000 P6,500,000
Dividends per share:
Preference P12.00 P12.00 P12.00
Ordinary P 2.60 P 4.60 P10.60
2.
Preference Ordinary Total
2007
Dividends in arrears – 2 yrs. P2,400,000 P2,400,000
Current dividends 100,000 P ----------- 100,000
Total P2,500,000 P ----------- P2,500,000
2008
Regular dividends P1,200,000 P 600,000 P1,800,000
Balance –P1,700,000
Preference – 10/15 1,133,333 1,133,333
Ordinary – 5/15 566,667 566,667
Total P2,333,333 P1,166,667 P3,500,000
2009
Regular dividends P1,200,000 P 600,000 P1,800,000
Balance –P4,700,000
Preference 800,000 800,000
Ordinary 3,900,000 3,900,000
Total P2,000,000 P4,500,000 P6,500,000
E 9-8
1. P2,500,000 / 200,000 shares P12.50
E 9-9
a. P10,000/60,000 = P.17
b. P70,000/60,000 = P1.17
c. P90,000/60,000 = P1.50
d. P150,000/60,000 = P2.50
e. P180,000/60,000 = P3.00
E 9-10
Profit P450,000
Less earnings identified with preference share capital 200,000
(20,000 sh x P100 x 10%)
Earnings identified with ordinary shares P250,000
P 9-1
1.
2009
Jan. 2 Cash 1,875,000
Ordinary Share Capital 1,250,000
Ordinary Share Premium 625,000
125,000 sh x P15
2010
Jan. 31 Dividends Payable 531,250
Cash 531,250
14 Cash 500,000
OSC Subscription Receivable 500,000
P1,250,000 x 40%
P 9-2
MMM Corporation
Statement of Changes in Shareholders’ Equity
For the Two Years Ending December 31, 2010
Ordinary Ordinary
Share Share Retained
Capital Premium Earnings Total
2009:
Issued 120,000 shares @ P24 P2,400,000 P 480,000 P2,880,000
Loss for the year (P300,000) ( 300,000)
Balances, December 31 P2,400,000 P 480,000 (P300,000) P2,580,000
2010:
Issued 80,000 shares @ P30 1,600,000 800,000 2,400,000
Profit for the year 800,000 800,000
VVV Inc.
Statement of Changes in Shareholders’ Equity
For the Two Years Ending December 31, 2010
5% Preference
Preference Ordinary Share Retained
Share Share Premium Earnings Total
2009:
Issued 6,000 PS @ P120 P 600,000 P 120,000 P 720,000
Issued 200,000 ordinary shares P1,400,000 1,400,000
Profit for the year P 240,000 240,000
Dividends:
PS – P600,000 x 5% ( 30,000) ( 30,000)
OS – 200,000 shares x P.25 ( 50,000) ( 50,000)
Balances, December 31 P 600,000 P1,400,000 P 120,000 P 160,000 P2,280,000
2010:
Issued 5,000 PS @ P130 500,000 150,000 650,000
Issued 100,000 OS @ P10 1,000,000 1,000,000
Profit for the year 600,000 600,000
Dividends:
PS – 1,100,000 x 5% ( 55,000) ( 55,000)
OS - 300,000 shares x P.50 ( 150,000) ( 150,000)
Balances, December 31 P1,100,000 P2,400,000 P 270,000 P 555,000 P4,325,000
MMM Corp.
Shareholders’ Equity
December 31, 2010
Contributed Capital:
Ordinary Share Capital, P20 par, 200,000 shares authorized,
all issued and outstanding P4,000,000
Ordinary Share Premium 1,280,000 P5,280,000
Retained Earnings 500,000
Total Shareholders’ Equity P5,780,000
VVV Inc.
Shareholders’ Equity
December 31, 2010
Contributed Capital:
5% Preference Share Capital, P100 par, 200,000 shares authorized,
11,000 shares issued and outstanding P1,100,000
Ordinary Share Capital, no par, no Stated Value 500,000 shares
authorized,
300,000 shares issued and outstanding 2,400,000
Preference Share Premium 270,000 P3,770,000
Retained Earnings 555,000
Total Shareholders’ Equity P4,325,000
P 9-3
DEF Corporation
Balance Sheet
December 31, 2009
Assets
Current Assets:
Cash P 200,000
Accounts Receivable P 100,000
Less Allowance for Doubtful Accounts 10,000 90,000
Merchandise Inventory 210,000
Store Supplies 5,000
Office Supplies 4,000
Prepaid Insurance 12,000
Total Current Assets P 521,000
Noncurrent Assets:
Land P1,000,000
Office Equipment, net of Accumulated Depreciation of P45,000 105,000
Store Equipment, net of Accumulated Depreciation of P75,000 175,000 1,280,000
Total assets P1,801,000
Liabilities
Current Liabilities:
Accounts Payable P 75,000
Income Tax Payable 163,100
Salaries Payable 12,000
Total Liabilities P 250,100
Shareholders’ Equity
Contributed Capital:
Ordinary Share Capital, P20 par, 50,000 shares
issued and outstanding P1,000,000
Ordinary Share Capital 100,000
Total Contributed Capital P1,100,000
Retained Earnings 450,900
Total Shareholders’ Equity 1,550,900
Total Liabilities and Shareholders’ Equity P1,801,000
DEF Corporation
Statement of Changes in Shareholders’ Equity
For the Year Ended December 31, 2009
Ordinary Ordinary Retained
Share Capital Share Earnings Total
Premium
Balances, Jan. 1 P 980,000 P 95,000 P228,000 P1,303,000
Issuance of CS 20,000 5,000 25,000
Declaration and dist.
DEF Corporation
Income Statement
For the Year Ended December 31, 2009
Sales (net of discounts of P50,000) P2,450,000
Cost of Goods Sold:
Merchandise Inventory, Jan. 1 P 150,000
Purchases (net of ret. and allow. of P100,000) 1,300,000
Cost of Goods available for Sale P1,450,000
Less Merchandise Inventory, Dec. 31 210,000 1,240,000
Gross Profit P1,210,000
Selling Expenses:
Sales Salaries P258,000
Advertising 75,000
Delivery 50,000
Store Supplies 10,000
Depreciation – Store Equipment 25,000
Miscellaneous 20,000 (438,000)
Administrative Expenses:
Office Salaries P189,000
Light and Power 60,000
Insurance 18,000
Depreciation – Office Equipment 15,000
Office Supplies 6,000
Miscellaneous 18,000 (306,000)
Profit before Income Tax P 466,000
Income Tax (35%) 163,100
Profit P 302,900
3. Adjusting Entries
Closing Entries
Sales 2,500,000
Purchases Returns and Allowances 100,000
Sales Discount 50,000
Purchases 1,400,000
Sales Salaries 258,000
Advertising 75,000
Delivery 50,000
Store Supplies Expense 10,000
Depreciation Expense – Store Equipment 25,000
Miscellaneous Expenses 20,000
Office Salaries 189,000
Light and Power 60,000
Insurance 18,000
Depreciation Expense – Office Equipment 15,000
Office Supplies Expense 6,000
Miscellaneous Administrative Expenses 18,000
Income Taxes 163,100
Income Summary 242,900
Balance – P1,580,000
PS – 10/15; OS 5/15 1,053,333 526,667 1,580,000
Total P1,133,333 P566,667 P1,700,000
Dividends per share P113.33 P56.67
4.
2007 PS OS Total
Dividends in arrears P240,000 P240,000
Regular dividends 80,000 P40,000 120,000
Balance – P90,000 50,000 40,000 90,000
Total P370,000 P80,000 P450,000
Dividends per share P37.00 P8.00
2008
Regular dividends P 80,000 P 40,000 P120,000
Balance – P630,000 50,000 580,000 630,000
Total P130,000 P620,000 P750,000
Dividends per share P13.00 P62.00
2009
Regular dividends P 80,000 P 40,000 P 120,000
Balance – P1,580,000 50,000 1,530,000 1,580,000
Total P 130,000 P1,570,000 P1,700,000
Dividends per share P13.00 P157.00
P 9-5
1. Total Shareholders’ Equity P2,300,000
Less Equity identified with PS (10,000 sh @ P30) 300,000
Equity identified with OS P2,000,000
BV per share
PS P 30.00
OS (P2,000,000 / 100,000 sh) P 20.00
P9-6
a. Profit P20,000
Less Earnings identified with PS (10,000 sh @ P25 x 10%) 20,000
Earnings identified with OS -----
b. Profit P75,000
Less Earnings identified with PS (10,000 sh @ P25 x 10%) 25,000
Equity identified with OS P50,000
c. Profit P120,000
Less Earnings identified with PS (10,000 sh @ P25 x 10%) 25,000
Equity identified with OS P95,000
d. Profit P300,000
Less Earnings identified with PS (10,000 sh @ P25 x 10%) 25,000
Earnings identified with OS P275,000
P 9-7
Contributed Capital:
10% PS, P50 par, 25,000 shares authorized,
12,000 shares issued and outstanding P 600,000
OS, P5 par, 500,000 shares authorized,
300,000 shares issued and outstanding 1,500,000
OS Dividend Distributable, 35,000 shares 175,000
OS Subscribed, 10,000 shares 50,000
Preference share Premium 60,000
Ordinary Share Premium 100,000
PIC from Stock Dividend 65,000
Total Contributed Capital P2,550,000
Retained Earnings
Appropriated for contingencies P250,000
Appropriated for Bond Retirement 300,000
Total P550,000
Unappropriated 400,000 950,000
Total Shareholders’ Equity P3,500,000
Multiple Choice
1. B 4. C 7. B 10. B 13. C 16. A 19. A
2. B 5. A 8. C 11. A 14. D 17. B 20. D
3. B 6. A 9. D 12. D 15. B 18. C
TM 32
1. T 5. F 9. F 13. T 17. T
2. T 6. F 10. F 14. T 18. F
3. T 7. F 11. T 15. F 19. T
4. T 8. F 12. F 16. F 20. F
TM 33
1. Contributed capital 9. Small share capital dividend
2. Share Capital 10. Dividends in arrears
3. Share premium 11. Deficit
4. Liquidating dividend 12. Book value per share
5. Scrip dividend 13. Unappropriated Retained Earnings
6. Dividends 14. Retained Earnings
7. Appropriated Retained Earnings 15. Participating Preference Share Capital
8. Property dividend 16. Paid-in Capital from Stock Dividend
17. Carrying value
18. Stock Dividend Distributable
19. Stock Dividend
20. Earnings per share
TM 34
1. A 6. C 11. C 16. A 21. D
2. B 7. A 12. C 17. C 22. B
3. D 8. A 13. D 18. B 23. A
4. D 9. D 14. D 19. C 24. B
5. B 10. A 15. D 20. A 25. D
TM 35
1. C ABC – P5.00; DEF – P12.00
2. D P252,000 + P116,550 + P118,420 + P116,000 + P12,000 = P614,970
3. B P614,970 + P38,390 = P653,360
4. B 400 sh x P50 x 6% = P1,200
5. A PS = P48,000; CS – P180,000 – P48,000 = P132,000
6. A PS = P48,000 / 6,000 = P8.00; CS = P132,000 /12,000 = P11.00
7. B P801,400 – P601,100 = P200,300
8. B 60,000 x 40% x P20 = P480,000
9. C P20 x 40%
10. D
TM 36
1. P1,500,000 75,000 sh x P20
2. P750,000 75,000 sh x P10
3. P2,250,000 P1,500,000 + P750,000
4. P150,000 P500,000 – P350,000
5. P2,400,000 P2,250,000 + P150,000
6. P32 P2,400,000/75,000
7. P4.67 P350,000/75,000
8. P6.67 P500,000/75,000
TM 37
1. P4.00 P50 x 8%
2. P24,450,000 P450,000 + P16,000,000 + P8,000,000
3. 9,000 sh P450,000 / P50
4. 1,600,000 sh P16,000,000 / P10
5. P72,000 P450,000 x 8% x 2 years
6. P68 LV + Div. in arrears = P60 + (P4 x 2 years) = P68
7. P16.67 [P21,450,000 – (9,000 x 68)]/ 1,600,000 sh
TM 38
Year Share
capital Case1 Case 2 Case 3 Case 4