11.

A Statement of Retained Earnings

As of Dec. 31. 2015

Retained Earnings, Jan. 1 76,000.00

Add: Net Income 84,000.00
Less: Dividends paid (28,000.00)
Retained Earnings, Dec.31 132,000.00
Appropriated for Treasury Stock (20,000.00)
Unappropriated Retained Earnings 112,000.00

Statement of Shareholders Equity

As of Dec. 31. 2015

Share Capital (par P15, authorized 100,000 shares, issued

35,000 shares, with 1,000 held as Treasury Stock
Additional Paid-in capital
Retained Earnings:
Appropriated for Treasury Stock 20,000.00
Unappropriated Retained Earnings 112,000.00
Total
Less: Treasury Stock
Total Shareholders Equity

B No. of shares issued 35,000.00

Less: Treasury Shares (1,000.00)
Shares of stock that received dividends 34,000.00

C EPS = Net Income / Common Shares Outstanding:

Net Income 84,000.00
Common Shares Outstanding 34,000.00
EPS 2.47

PER = Market Value / EPS:

Market Value of Stock 80.00
EPS 2.47
Price-Earnings Ratio 32.38

ROE = Net Income / Ordinary Shares Equity

Net Income 84,000.00
Ordinary Shares Equity 817,000.00
Return on Equity 10%

Ordinary Shares Equity:

Share Capital 525,000.00
 Additional paid-in capital 180,000.00
Retained Earnings 132,000.00
Less: Treasury Shares (20,000.00)
817,000.00

12. A
Jan. 10 Retained Earnings 380,000.00
Cash Dividends Payable
(Outstanding Shares = 20,000 issued less 1,000 treasury shares) x P20

Feb. 4 Retained Earnings 100,000.00

Appropriation Reserve for Plant Expansion

Feb. 10 Cash Dividends Payable 380,000.00

Cash

May 15 Cash 28,000.00

Treasury Shares
Premium from Treasury Shares

Appropriation Reserve for Treasury Shares 25,200.00

Retained Earnings

June 1 Retained Earnings 98,500.00

Script Dividends Payable
(Outstanding shares = 20,000 issued less 300 treasury shares) x 50 x 10%

Nov 1 Script Dividends Payable 98,500.00

Interest Expense (98,500 x 18% x 150/360) 7,387.50
Cash

Dec. 31 Available for Sale Investment (250,000 x 10%) 25,000.00

Unrealized Gain on available for sale investment

Income Summary 250,000.00

Retained Earnings

B Fernando Corporation
Statement of Changes in Shareholders' Equity
For the year ended Dec. 31, 2015

Ordinary Share Share Premium Retained Earnings

Capital

January 1 1,000,000.00 600,000.00 750,000.00

 Appropriation Reserve for Plant Expansion (100,000.00)
Re-issuance 2,800.00 25,200.00
Unrealized Gain on available for sale investment
Net Income 250,000.00
Dividends declared and paid (478,500.00)
December 31 1,000,000.00 602,800.00 446,700.00

B Fernando Corporation
Statement of Shareholders' Equity
As of Dec. 31, 2015

Ordinary Share Capital, P50 par, 30,000 shares authorized,

20,000 issued with 300 shares in treasury 1,000,000.00
Share Premium 602,800.00
Unrealized Gain on available for sale investment 25,000.00
Appropriation Reserve for Plant Expansion 150,000.00
Appropriation Reserve for Treasury Shares 10,800.00
Retained Earnings unappropriated 446,700.00
Total 2,235,300.00
Less: Treasury Shares (10,800.00)
Total Shareholders' Equity 2,224,500.00

D Return on Equity (ROE) = Net Income / Ordinary Shares Equity

Net Income 250,000.00
Ordinary Shares Equity 2,224,500.00
Return on Equity 11%

Earnings per share (EPS) = Net Income / Common Shares Outstanding:

Net Income 250,000.00
Common Shares Outstanding 19,700.00
EPS 12.69
525,000.00
180,000.00

132,000.00
837,000.00
(20,000.00)
817,000.00
 380,000.00

100,000.00

380,000.00

25,200.00
2,800.00

25,200.00

98,500.00

105,887.50

25,000.00

250,000.00

Reserves Treasury Shares Total

86,000.00 (36,000.00) 2,400,000.00

100,000.00 -
(25,200.00) 25,200.00 28,000.00
25,000.00 25,000.00
250,000.00
(478,500.00)
185,800.00 (10,800.00) 2,224,500.00
2 A - a) Existing Equity P&L ratio New Equity
Tina 400,000.00 40% 400,000.00
Lou 400,000.00 40% 400,000.00
Lena 200,000.00 20% 100,000.00
Rod 100,000.00
1,000,000.00 100% 1,000,000.00

Lena, Capital 100,000.00

Rod, Capital

b) Existing Equity P&L ratio New Equity

Tina 400,000.00 40% 300,000.00
Lou 400,000.00 40% 300,000.00
Lena 200,000.00 20% 150,000.00
Rod 250,000.00
1,000,000.00 100% 1,000,000.00

Cash 240,000.00
Tina, Capital 4,000.00
Lou, Capital 4,000.00
Lena, Capital 2,000.00
Rod, Capital

c) Existing Equity P&L ratio Agreed Equity

Tina 400,000.00 40% 27%
Lou 400,000.00 40% 40%
Lena 200,000.00 20% 20%
Rod 13%
1,000,000.00 100% 100%

Tina, Capital 100,000.00

Lou, Capital 100,000.00
Lena, Capital 50,000.00
Assets

Tina, Capital 100,000.00

Rod, Capital

B
Tina, Capital 200,000.00
Lou, Capital 300,000.00
Lena, Capital 150,000.00
Rod, Capital 100,000.00
Revised Partners' Equity 750,000.00
 C
Half of Lena's equity 100,000.00
Profit of Lena 50,000.00
Cash paid by Rod to Lena 150,000.00

D 1/4 share in the partnership (1,000,000 * 1/4)

Amount paid by Rod
Loss of the partners

3 (a)
Daisy, Capital 160,000.00
Maggie, Capital

(b)
Bonnie, Capital 200,000.00
Maggie, Capital

(c) Selling price 200,000.00

Half of Dais'y Equity (320,000 x 1/2) 160,000.00
Gain 40,000.00
divide by interest ratio 50%
Total Gain of Daisy 80,000.00
divide by interest ratio with Bonnie 50%
Total Partnership asset revaluation 160,000.00

Asset 160,000.00
Bonnie, Capital
Daisy Capital
Asset revaluation

Daisy Capital 200,000.00

Maggie, Capital

(d) Selling price 300,000.00

divide by equity share 50%
Total Partnership Equity 600,000.00
Less: Unadjusted Equity
Bonnie 400,000.00
Daisy 320,000.00 720,000.00
Revaluation Loss (120,000.00)

Bonnie, Capital 60,000.00

Daisy, Capital 60,000.00
 Assets
Asset revaluation.

Bonnie, Capital 170,000.00

Daisy, Capital 130,000.00
Maggie, Capital
Admission of Maggie for 50% interest in the partnership.

Bonnie, Capital 170,000.00

Daisy, Capital 130,000.00
Maggie, Capital 300,000.00
Revised Partnership Equity 600,000.00

Agreed Equity based on

4 a) P&L ratio Existing Equity
P&L ratio

Edgar 30% 400,000.00 360,000.00

Paz 40% 500,000.00 480,000.00
Emy 30% 300,000.00 360,000.00

100% 1,200,000.00 1,200,000.00

b) Edgar and Paz will receive cash payments of 40,000 and 20,000, respectively, from Emy.

c) Edgar, Capital 40,000.00

Paz, Capital 20,000.00
Emy, Capital

5 P&L ratio Existing Equity Transfer of Interest

Edgar 30% 400,000.00 (133,333.33)
Paz 40% 500,000.00 (166,666.67)
Emy 30% 300,000.00
Georgina 300,000.00
100% 1,200,000.00

6 BookValue Market Value

Accounts Receivable 120,000.00 102,000.00
Inventory 200,000.00 258,000.00
320,000.00 360,000.00
Pen 40%
May 60%

a.
Inventory 58,000.00
Accounts Receivable
 Pen, Capital
May, Capital

P&L ratio Existing Equity Revaluation

Pen 40% 450,000.00 16,000.00
May 60% 650,000.00 24,000.00
100% 1,100,000.00 40,000.00

b. May's 40% interest (P674,000 x 40%)

Profit
Payment of Wen

c. May, Capital 269,600.00

Wen, Capital (P674,000 x 40%)

d P&L ratio Existing Equity Revaluation

Pen 40% 450,000.00 16,000.00
May 60% 650,000.00 24,000.00
Wen
100% 1,100,000.00 40,000.00

e
Profit 350,000.00
Distribution:
Pen 40% 140,000.00
May 36% 126,000.00
Wen 24% 84,000.00
100% 350,000.00

7 a. P&L ratio Existing Equity Revaluation

Pen 40% 450,000.00 16,000.00
May 60% 650,000.00 24,000.00
100% 1,100,000.00
Interest Ratio
Total Agreed Partners' Equity

b. Total Agreed Partners' Equity

Wen's interest ratio
Wen's investment

c. Cash 760,000.00
Wen's Capital
 d Pen, Capital 466,000.00
May, Capital 674,000.00
Wen, Capital 760,000.00
Revised Partners' Equity 1,900,000.00

Equivalent to Total
e Existing P&L ratio
Equity
Pen 40%
60%
May 60%
Wen 40%
100% 100%

8 a.1) P&L ratio Existing Equity Revaluation

Pen 40% 450,000.00 16,000.00

May 60% 650,000.00 24,000.00

100% 1,100,000.00 40,000.00

Ratio
Total Agreed Capital
25% interest (1,520,000 x 25%)
Investment
Bonus

a.2) There is a bonus to existing partner because contribution of new partner is greater than his capital credit.
Cash 500,000.00
Pen, Capital (40% x 120,000)
May, Capital (60% x 120,000)
Wen, Capital
Capital investment of new partner with bonus distrubuted to existing partners based on their P&L ratio.

b.1) P&L ratio Existing Equity Revaluation

Pen 40% 450,000.00 16,000.00

May 60% 650,000.00 24,000.00

100% 1,100,000.00 40,000.00

Ratio
Total Agreed Capital
25% interest (1,520,000 x 25%)
Investment
Revaluation - downward

b.2)
Pen, Capital 32,000.00
 May, Capital 48,000.00
Non-Current Asset

Cash 300,000.00
Wen, Capital

9 Option a P&L ratio Existing Equity

Athena 60% 110,000.00
Apollo 40% 90,000.00
Titus
100% 200,000.00
Ratio 70%
Total Agreed Capital 285,714.29
30% interest (285,714.29 x 30%) 85,714.29
Investment 120,000.00
Revaluation - upward (34,285.71)

Assets 34,285.71
Athena, Capital
Apollo, Capital
Asset revaluation.

Cash 120,000.00
Titus, Capital
Admission of Titus.

Option b P&L ratio Existing Equity

Athena 60% 110,000.00
Apollo 40% 90,000.00
Titus
100% 200,000.00
Ratio 70%
Total Agreed Capital 285,714.29
30% interest (285,714.29 x 30%) 85,714.29
Investment 75,000.00
Revaluation - downward 10,714.29

Athena, Capital 6,428.57

Apollo, Capital 4,285.71
Assets
Asset revaluation.

Cash 75,000.00
Titus, Capital
Admission of Titus.
 c. Capital contributions of existing partners were reduced. Apollo's capital contribution is higher than Titus' capital c

10 a) Existing Equity Admission New Equity

Fiona 350,000.00 350,000.00
Gary 250,000.00 250,000.00
Romy 300,000.00 300,000.00
600,000.00 300,000.00 900,000.00

Land 300,000.00
Romy, Capital

b) Existing Equity Bonus

Fiona 350,000.00 (58,333.33)
Gary 250,000.00 (41,666.67)
Romy
600,000.00 (100,000.00)
Ratio 60%
Total Agreed Capital 1,000,000.00
40% interest 400,000.00
Investment 300,000.00
Bonus 100,000.00

Land 300,000.00
Fiona, Capital 58,333.33
Gary, Capital 41,666.67
Romy, Capital

c Existing Equity Revaluation

Fiona 350,000.00 (58,333.33)
Gary 250,000.00 (41,666.67)
Romy
600,000.00 (100,000.00)
Ratio 60%
Total Agreed Capital 1,000,000.00
40% interest 400,000.00
Investment 300,000.00
Revaluation 100,000.00

Fiona, Capital 58,333.33

Gary, Capital 41,666.67
Assets
Asset revaluation.
 Land 300,000.00
Romy, Capital
Investment of Romy.

d. Existing Equity Bonus

Fiona 350,000.00 25,000.00
Gary 250,000.00 17,857.14
Romy
600,000.00 42,857.14
Ratio 70%
Total Agreed Capital 857,142.86
30% interest 257,142.86
Investment 300,000.00
Bonus (42,857.14)

Land 300,000.00
Fiona, Capital
Gary, Capital
Romy, Capital

e. Existing Equity Revaluation

Fiona 350,000.00 25,000.00
Gary 250,000.00 17,857.14
Romy
600,000.00 42,857.14
Ratio 70%
Total Agreed Capital 857,142.86
30% interest 257,142.86
Investment 300,000.00
Revaluation (42,857.14)

Assets 42,857.14
Fiona, Capital
Gary, Capital
Asset revaluation.

Land 300,000.00
Romy, Capital
Investment of Romy.

11 a) Existing Equity New partner investment

Chen 2,000,000.00
Fran 1,000,000.00
 Paula 2,000,000.00
Total 3,000,000.00 2,000,000.00
Agreed Equity 5,000,000.00
Paula's investment 2,000,000.00
Paula's interest 40%

Existing Equity New partner investment

b)
Chen 2,000,000.00 (50,000.00)
Fran 1,000,000.00 (50,000.00)
Paula 3,000,000.00
Total 3,000,000.00 2,900,000.00
Ratio 50%
Agreed Equity 6,000,000.00
Paula's interest 50%
Paula's capital credit 3,000,000.00
Bonus from existing partners 100,000.00
Paula's investment 2,900,000.00

Cash 2,900,000.00
Chen, Capital 50,000.00
Fran, Capital 50,000.00
Paula, Capital

Existing Equity Revaluation

c)
Chen 2,000,000.00 500,000.00
Fran 1,000,000.00 500,000.00
Paula 0.00
Total 3,000,000.00 1,000,000.00
Agreed Capital 6,000,000.00
Additional Investment 3,000,000.00
Upward revaluation 1,000,000.00
Paula's investment 2,000,000.00

Asset 1,000,000.00
Chen, Capital
Fran, Capital
Asset revaluation.

Cash 2,000,000.00
Paula, Capital

Existing Equity Revaluation

d)
 Chen 2,000,000.00 (100,000.00)
Fran 1,000,000.00 (100,000.00)
Paula
Total 3,000,000.00 (200,000.00)
Agreed Capital 4,800,000.00
Increase in Capital 1,800,000.00
Paula's investment 2,000,000.00
Revauation (200,000.00)

Paula's interest (50%) 2,400,000.00

Paula's investment 2,000,000.00
Bonus from existing existing partner 400,000.00

Chen, Capital 100,000.00

Fran, Capital 100,000.00
Assets
Revaluation

Cash 2,000,000.00
Chen, Capital 200,000.00
Fran, Capital 200,000.00
Paula, Capital

e) Agreement to give credit for goodwill is not valid because bonus will not affect asset but only capital.
 New PL& ratio
40%
40%
10%
10%
100%

100,000.00

New PL& ratio

30%
30%
15%
25%
100%

250,000.00

Agreed Equity New Equity Decrease

200,000.00 100,000.00
300,000.00 100,000.00
150,000.00 50,000.00
100,000.00 100,000.00 (Deducted from Tina)
750,000.00 750,000.00 250,000.00

250,000.00

100,000.00
250,000.00
240,000.00
10,000.00

160,000.00

200,000.00

80,000.00
80,000.00

200,000.00
 120,000.00

300,000.00

Decrease (Increase)

40,000.00
20,000.00
(60,000.00)

0.00

60,000.00

New Equity New P&L ratio

266,666.67 24%
333,333.33 31%
300,000.00 30%
300,000.00 15%
1,200,000.00 100%

Inc (Dec)
(18,000.00)
58,000.00
40,000.00
16,000.00
24,000.00

18,000.00
 16,000.00
24,000.00

Revised Equity
466,000.00
674,000.00
1,140,000.00

269,600.00
15,000.00
284,600.00

269,600.00

Revised Equity Admission Capital After Admission Revised P&L

466,000.00 466,000.00 40%
674,000.00 (269,600.00) 404,400.00 36%
269,600.00 269,600.00 24%
1,140,000.00 0.00 1,140,000.00 100%

Revised Equity
466,000.00
674,000.00
1,140,000.00
60%
1,900,000.00

1,900,000.00
40%
760,000.00

760,000.00
 Revised P&L

24%
36.00%
40%
100%

Investment of
Revised Equity Total Contributed Capital
new partner
466,000.00 48,000.00 514,000.00
674,000.00 72,000.00 746,000.00
380,000.00 380,000.00
1,140,000.00 500,000.00 1,640,000.00
75%
1,520,000.00
380,000.00
500,000.00
(120,000.00)

r is greater than his capital credit.

48,000.00
72,000.00
380,000.00
rtners based on their P&L ratio.

Revised Equity Revaluation Investment of new partner Total Contributed Capital

466,000.00 (32,000.00) 434,000.00

674,000.00 (48,000.00) 626,000.00
0.00 300,000.00 300,000.00
1,140,000.00 (80,000.00) 300,000.00 1,360,000.00
75%
1,520,000.00
380,000.00
300,000.00
80,000.00
 80,000.00

300,000.00

Revaluation Admission Total Contributed Capital New P&L Ratio

20,571.43 130,571.43 42%
13,714.29 103,714.29 28%
120,000.00 120,000.00 30%
34,285.71 120,000.00 354,285.71 100%

20,571.43
13,714.29

120,000.00

Revaluation Admission Total Contributed Capital New P&L Ratio

(6,428.57) 103,571.43 42%
(4,285.71) 85,714.29 28%
75,000.00 75,000.00 30%
(10,714.29) 75,000.00 264,285.71 100%

10,714.29

75,000.00
ribution is higher than Titus' capital contribution but his capital credit is lower than Titus capital credit.

300,000.00

Admission New Equity

291,666.67
208,333.33
400,000.00 400,000.00
400,000.00 900,000.00

400,000.00

Admission New Equity

291,666.67
208,333.33
300,000.00 300,000.00
300,000.00 800,000.00

100,000.00
 300,000.00

Admission New Equity

375,000.00
267,857.14
257,142.86 257,142.86
257,142.86 900,000.00

25,000.00
17,857.14
257,142.86

Admission New Equity

375,000.00
267,857.14
300,000.00 300,000.00
300,000.00 942,857.14

25,000.00
17,857.14

300,000.00

Total agreed capital Interest

2,000,000.00 30%
1,000,000.00 30%
 2,000,000.00 40%
5,000,000.00 100%

Total agreed capital Interest

1,950,000.00 25%
950,000.00 25%
3,000,000.00 50%
5,900,000.00 100%

3,000,000.00

Admission of new Total agreed

Interest
partner capital
2,500,000.00 34%
1,500,000.00 34%
2,000,000.00 2,000,000.00 33%
2,000,000.00 6,000,000.00 100%

500,000.00
500,000.00

2,000,000.00

Admission of new
Bonus Total agreed capital Interest
partner
 (200,000.00) 1,700,000.00 34%
(200,000.00) 700,000.00 34%
2,400,000.00 2,400,000.00 33%
(400,000.00) 2,400,000.00 4,800,000.00 100%

200,000.00

2,400,000.00

ct asset but only capital.