Accele4_Assignment M5

Directions: Read the problems below. Write the letter of your answer on the space before the
number. Solutions required on a yellow paper .

NAME______________________________Section______________Date______________

For nos 1-5

JUNMYEON COMPANY’s shareholders’ equity account balance at December 31, 20x3, were as
follows:
Ordinary share 800,000
Additional paid-in capital 1,600,000
Retained earnings 1,845,000

The following 20x4 transactions and other information relate to the shareholders’ equity accounts:

a. Junmyeon had 400,000 authorized shares of P5 par ordinary share, of which 160,000 shares
were issued and outstanding.

b. On March 5, 20x4, Junmyeon acquired 5,000 shares of its ordinary share for P10 per share to
hold as treasury share. The shares were originally issued at P15 per share. Junmyeon uses the
cost method to account for treasury share. Treasury share is permitted in Junmyeon’s state of
incorporation.

c. On July 15, 20x4, Junmyeon declared and distributed a property dividend of inventory. The
inventory had a P75,000 carrying value and a P60,000 fair market value.

d. On January 2, 20x2, Junmyeon granted share options to employees to purchase 20,000 share of
Junmyeon’s ordinary share at P18 per share, which was the market on that date. The option
may be exercised within a three year period beginning January 2, 20x4. The measurement date
is the same as the grant date. On October 1, 20x4, employees exercised all 20,000 options
when the market value of the share was P25 per share. Junmyeon issued new shares to settle
the transaction.

e. Junmyeon’s net income for 2014 was P240,000.

Questions
Based on the information above and other analysis as necessary, answer the following question:

1. Junmyeon’s Ordinary share balance at December 31, 20x4 is:

a. P 1,300,000 b. P 1,160,000 c. P 900,000 d. P 800,000

2. Junmyeon’s Additional paid-in capital balance at December 31, 20x4 is:

a. P 1,860,000 b. P 1,960,000 c. P 2,000,000 d. P 2,100,000

3. Junmyeon’s Retained Earnings balance at December 31, 20x4 is:

a. P 2,085,000 b. P 2,025,000 c. P 2,010,000 d. P 1,770,000

4. Junmyeon’s Treasury Share balance at December 31, 20x4 is:

a. P0 b. P 50,000 c. P 75,000 d. P 125,000
5. Junmyeon’s Shareholders’ Equity balance at December 31, 20x4 is:
a. P 4,910,000 b. P 4,820,000 c. P 4,735,000 d. P 4,720,000
For nos. 6-7

During your audit of Skwovet Company for the year 2024, its initial year of operations, you find the
following entries in its “Shareholders’ Equity” account:

____________________SHAREHOLDERS’ EQUITY___________________
Jan. 01 Issuance of 150,000 shares of capital share, P10 par;
authorized 500,000 shares in exchange for real
estate property with a market value of P2 million 1,500,000

Jan. 15Sale of 200,000 shares of capital share at P12 per

share 2,400,000

Mar. 01Purchase 20,000 shares of its own share at P15 per

Share 300,000

May 15Loss on sale of motor equipment 100,000

Jun 10 Proceeds from sale of 10,000 treasury shares 170,000

Dec 31 Declared cash dividends payable quarterly

beginning April 1, 2008 200,000

Dec 31 Net profit for the year 790,000

Questions

6. The adjusted balance of the “Shareholders’ Equity” account of the company’s balance sheet as of
December 31, 2024 is:
a. P 4.36 million b. P 4.46 million c. P 4.76 million d. P 4.91 million

7. The book value per share of the company’s share as of December 31, 2024 is
a. P 14.44 b. P 14.00 c. P 13.12 d. P 12.82

30. The following capital accounts are shown in the balance sheet of Alcremie Corp.:

Ordinary share, 10,000 shares, par value P100 P1,000,000

Premium on ordinary share 20,000
Share premium – treasury share 30,000
Accumulated profits and losses 750,000
Treasury share, 2,000 shares at cost 250,000

The entire 2,000 treasury shares were sold for P200,000

What would be the balance of the accumulated profits and losses account after this sale?

a. 250,000 c. 730,000
 b. 700,000 d. 750,000

For nos 8-17

On January 1, 2023, the shareholders’ equity of Toxtricity Company’s balance sheet revealed the
following information:

P5 Convertible Preference Share (P40 par value; 50,000 shares

authorized, 20,000 shares issued and outstanding) 800,000
Ordinary share (P5 stated value; 200,000 shares
authorized, 120,000 shares issued and outstanding) 600,000
Paid-in capital in excess of par 3,000,000
Retained earnings 4,500,000
Total shareholders’ equity 8,900,000

In addition, the following information is known:

a. On February 2, 2023, 15,000 ordinary shares were acquired by the company for P33 per share.

b. On September 30, 2023, 5,000 preference shares were converted to ordinary shares. One
share of preference share is convertible into one share of ordinary share. At the time of
conversion, the ordinary share had a market value of P42 per share.

c. On December 21, 2023, the company received a share subscription of 10,000 ordinary shares at
a subscription price of P33 per share. The subscription contract required a cash down payment
equal to 60% of the subscription price, with the balance due on February 1, 2004.

d. On February 1, 2024, 8,500 ordinary shares were issued according to the subscription contract.
Because of default by a subscriber, 1,500 shares were not issued. The subscription contract
requires the subscriber to forfeit all cash advance.

e. On April 15, 2024, 10,000 shares held in treasury were reissued at P50 per shares.

f. On May 16, 2024, a special dividend of preference share was distributed to ordinary
shareholders. One hundred shares of ordinary share entitled a shareholder to one share of
preference share. The market price of preference share was P40 per share at that time.

g. Net income for 2023 was P660,000 and for 2024, P890,000.

Questions
8. The total preference share at December 31, 2023 is:
a. P 600,000 b. P 625,000 c. P 651,400 d. P 667,500

9. The total ordinary share at December 31, 2023 is:

a. P 600,000 b. P 625,000 c. P 651,400 d. P 667,500

10. The total additional-paid in capital at December 31, 2023 is:

a. P 3,637,300 b. P 3,625,000 c. P 3,612,700 d. P 3,455,000

11. The total retained earnings at December 31, 2023 is:

a. P 4,706,887.50 b. P 5,160,000.00 c. P 5,491,925.00 d. P 5,596,887.50
12. The Treasury share at December 31, 2023 is:
a. P 495,000 b. P 330,000 c. P 165,000 d. P 0

13. The total preference share at December 31, 2024 is:

a. P 548,600 b. P 600,000 c. P 625,000 d. P 651,400

14. The total ordinary share at December 31, 2024 is:

a. P 600,000 b. P 625,000 c. P 651,400 d. P 667,500

15. The total additional paid-in capital at December 31, 2024 is:
a. P 3,637,300 b. P 3,625,000 c. P 3,612,70 d. P 3,455,000

16. The total retained earnings at December 31, 2024 is:

a. P 5,998,900.00b. P 5,491,925.00 c. P 4,965,000.00 d.P 4,706,887.50

17. The Treasury share at December 31, 2024 is:

a. P 495,000 b. P 330,000 c. P 165,000 d. P 0

46. Eternatus Corp. granted share options to its employees with a fair value of P4,500,000 on
January 1, 2022. The options vears in three years and the options are exercisable starting
January 1, 2025 until December 31, 2026.

On December 31, 2022, it was estimated that 5% of the employees will leave the entity during
the vesting period. This estimate was revised to 6% during the year 2023. On December 31,
2024, employees record indicates that 90% of the employees stayed and became entitled to
the options.

What would be the expense charged during the year ending December 31, 2022?
a. 1,350,000 c. 1,425,000
b. 1,410,000 d. 1,500,000

18. Use the same information given in no. 17. What would be the expense charged during the year
ended December 31, 2023?
a. 1,350,000 c. 1,395,000
b. 1,410,000 d. 1,500,000

19. Turtonator Corp has granted 200 share appreciation rights to each of its 300 employees on
January 2, 2022. The rights are due to vest on December 31, 2023, with payment being made on
December 31, 2024. During the year 2022, the company estimated that all options would vest;
although only 90% of the options actually vested.

Share prices are as follows:

January 1, 2022 P20
December 31, 2022 24
December 31, 2023 27
December 31, 2024 30

What liability will be recorded on December 31, 2022 as a result of the share appreciation rights?
a. 108,000 c. 189,000
b. 120,000 d. 270,000
20. Use the same information given above, how much compensation expense should be recorded
for the year ended December 31, 2023?
a. 108,000 c. 96,000
b. 120,000 d. 285,000

21. Yamper Corporation’s performance during the last three years had not been favorable resulting
to a deficit of P950,000 at December 31, 2020. The company, with the approval of the shareholders
decided to eliminate a deficit through a quasi-reorganization which would be effected as follows: The
company’s 200,000, P20 par ordinary share capital originally issued at an average price of P22
would be reissued with par value of P15.

Immediately after quasi-reorganization, what would be the balance of additional paid-in capital?
a. 1,400,000 c. 600,000
b. 1,000,000 d. 450,000

For nos 22-25

Listed below are the transactions that affected the shareholders’ equity of Wedgehurst Corporation
during the period 2013-2015. At December 31, 2012, the corporation’s accounts included:
(P in 000s)
Ordinary share, 315 million shares at P1 par P 315,000
Paid-in capital – excess of par 1,890,000
Retained earnings 2,910,000

a. November 2, 2013, the board of directors declared a cash dividend of P0.80 per share on its
ordinary shares, payable to shareholders of record November 16, to be paid December 2.

b. On March 3, 2014, the board of directors declared a property dividend consisting of bonds of
Hulbury County that Wedgehurst was holding as an investment. The bonds had a fair market
value of P4.8 million, but were purchased two years previously for P3.9 million. Because they
were intended to be held-to-maturity, the bonds had not been previously written up. The
property dividend was payable to shareholders of record March 14, to be distributed April 6.

c. On July 13, 2014, the corporation declared and distributed a 5% ordinary share dividend (when
the market value of the ordinary share was P21 per share). Cash was paid for fractional share
rights representing 750,000 equivalent whole shares.

d. On November 2, 2014, the board of directors declared a cash dividend of P0.80 per share on its
ordinary shares, payable to shareholders of record November 16, to be paid December 2.

e. On January 16, 2015, the board of directors declared and distributed a 3-for-2 share split
effected in the form of a 50% share dividend when the market value of the ordinary share was
P23 per share.

f. On November 2, 2015, the board of directors declared a cash dividend of P0.65 per share on its
ordinary shares, payable to shareholders of record November 16, to be paid December 2.

g. The reported net income of Wedgehurst was P990 million, P1,185 million, and P1,365 million for
2013, 2014, and 2015, respectively.

Questions
22. The Retained earnings of WedgehurstCorporation at the end of 2015 is: (P in 000s)
 a. P 5,276,700 b. P 5,276,600 c. P 5,112,600 d. P 5,095,850

23. The Additional paid-in capital of WedgehurstCorporation at the end of 2015 is: (P in 000s)
a. P 5,860,000 b. P 5,655,000 c. P 2,190,000 d. P 2,025,000

24. The Ordinary share of WedgehurstCorporation at the end of 2015 is: (P in 000s)
a. P 495,750 b. P 495,000 c. P 330,750 d. P 330,000

25. The total Shareholders’ Equity of WedgehurstCorporation at the end of 2015 is: (P in 000s)
a. P 11,097,450 b. P 7,797,600 c. P 7,796,700 d. P 7,615,850