Type No.

of items Points per item

Part I. Theory: Matching Type 10.00 1.00
Part II. Theory: Multiple-choice Questions 10.00 1.00
Part III. Straight Problems 15.00 2.00
Part IV. Comprehensive Problem 10.00 2.00
Total points to earn
10.00
10.00
30.00
20.00
70.00
 1 point each 1 point each 2 points each 2 points each 2 points each
Part I Part 2 Part 3 Part 4 Bonus
1 corporators c 2,000.00 No effect Brooklyn 99
2 one person corporation c 5,100,000.00 800,000 increase Asus
3 delinquent subscriber b 18,500,000.00 1,404,000.00
4 preferred share c 2,500,000.00 45,000.00
5 five (5) d 23,000,000.00 474,900.00
6 right of succession d 28,000,000.00 3,321,100.00
7 stock certificate b 100,000.00 216,400.00
8 treasury shares b 4,320,000.00 9,380,000.00
9 cumulative feature b 212,000.00 15,164,000.00
10 trust fund doctrine b 1,010,000.00 18,485,100.00
11 260,000.00
12 Zero
13 60,000.00
14 172.00
15 124.00
The highest bidder refers to the person offering to pay the full amount of the balance on the subscription
together with any accrued interest, cost of advertisement and expenses of the auction sale (i.e., the total
offer price), for the SMALLEST number of shares

In the problem, all bidders are offering to pay in full the offer price of P300,000 (280,000 balance + 20,000 expens
but AAA Corp. is the one who is offering the SMALLEST number of shares. Thus, AAA Corp. is the highest bidd

Total number of shares delinquent 5,000.00

Less: Number of shares acquired by highest bidder (3,000.00)
Number of shares received by delinquent subscriber 2,000.00 No. 1
ce on the subscription
on sale (i.e., the total

80,000 balance + 20,000 expenses)

, AAA Corp. is the highest bidder
Authorized share capital 5,000,000.00
Less: Unissued share capital (2,000,000.00)
Issued share capital 3,000,000.00
Add: Share dividend distributable -
Add: Subscribed share capital 1,000,000.00
Less: Subscription receivable (non-current) (400,000.00) if silent, assume non-current
Add: Share premium 500,000.00
Contributed capital 4,100,000.00
Add: Retained earnings
Unappropriated 600,000.00
Appropriated 300,000.00
Add: Other comprehensive income 200,000.00
Less: Treasury shares, at cost (100,000.00)
Shareholders' Equity 5,100,000.00 No. 2
non-current
Computation of Legal Capital
For par value shares:
Share capital issued 3,000,000.00
Add: Subscribed share capital 3,500,000.00
Legal capital - par value shares 6,500,000.00

For no-par value shares:

Share capital issued 6,000,000.00
Add: Subscribed share capital 4,000,000.00
Add: Share premium 2,000,000.00
Legal capital no-par value shares 12,000,000.00

Total Legal Capital 18,500,000.00 No. 3

 Debit
Cash 18,000,000.00
Ordinary share capital
Share premium - ordinary shares

Land 3,000,000.00
Preference share capital
Share premium - preference shares

Subscriptions receivable 1,600,000.00

Cash 400,000.00
Subscribed preference share capital
Share premium - preference shares

Income summary 5,000,000.00

Retained earnings

Preference share capital 2,500,000.00 No. 4

Subscribers will NOT be issued shares unless and until the subscriptions are FULLY paid. Thus, the subscribed
preference share capital of P1,000,000 will not be transferred to the Preference share capital account unles and
until the subscriptions are fully paid and the stock certificate is issued.

Share capital issued 17,500,000.00

Add: Share dividend distributable -
Add: Subscribed share capital 1,000,000.00
Less: Subscriptions receivable (if non-current) - expected to be collected within the next 12
Add: Share premium 4,500,000.00
Contributed capital 23,000,000.00 No. 5
Add: Retained earnings 5,000,000.00
Add: Other comprehensive income -
Less: Treasury shares, at cost -
Shareholders' Equity 28,000,000.00 No. 6
 Credit

15,000,000.00
3,000,000.00

2,500,000.00
500,000.00

1,000,000.00
1,000,000.00

5,000,000.00

FULLY paid. Thus, the subscribed

ce share capital account unles and

ed to be collected within the next 12 months, so classified as current

 Debit Credit
Initial entry to record original issuance:
Cash 5,000,000.00
Share capital 500,000.00
Share premium 4,500,000.00

Share capital 20,000.00

Share premium 180,000.00
Retained earnings 100,000.00 No. 7
Cash 300,000.00

Share premium
-
180,000.00 4,500,000.00

4,320,000.00
No. 8
Shares issued immediately prior to share-split 110,000.00
Multiply by: Share-split 2.00
Shares issued immediately after share-split 220,000.00
Less: Remaining treasury shares after share-split (8,000.00)
Shares outstanding at year-end 212,000.00 No. 9
Authorized 50,000.00
Less: Unissued (20,000.00)
Issued 30,000.00
Add: Subscribed 10,000.00
Less: Treasury shares (5,000.00)
Shares outstanding 35,000.00 No. 10
Multiply by: Share dividend rate 10.00%
# of share dividends distributable 3,500.00
Multiply by: Measurement 140.00
Debit to retained earnings 490,000.00

Entry on declaration date:

Retained earnings 490,000.00
Share dividend payable 350,000.00
Share premium 140,000.00

Entry on distribution date:

Share dividend payable 350,000.00
Share capital 350,000.00

Retained earnings immediately before share dividend declaration 1,500,000.00

Less: Debit to retained earnings (490,000.00)
Retained earnings immediately after share dividend declaration 1,010,000.00
 Retained Earnings
130,000.00 420,000.00
30,000.00

260,000.00 No. 11

The proceeds from donated shares is entried as follows:

Cash 45,000.00
Donated capital 450,000.00
This transaction does not affect retained earnings

The excess of proceeds over cost of treasury shares sold

is credited to Share premium - treasury
 Debit Credit
Treasury shares 500,000.00
Cash 500,000.00

Cash 300,000.00
Share premium - treasury 50,000.00
Treasury shares 250,000.00

Cash 90,000.00
Share premium - treasury 10,000.00
Treasury shares 100,000.00
Answer for No. 12 is ZERO since the first priority would be
any balance in the Share Premium - treasury account

Presumed original issue price of 225,000 shares 3,750,000.00

Divided by: 225,000 shares 225,000.00
Issue price per share 16.67
Less: Par value per share (10.00)
Excess over par 6.67
Multiply by: Number of treasury shares retired 3,000.00
Debit to share premium - original issuance 20,000.00

Share capital 30,000.00

Share premium 20,000.00
Share premium - treasury 40,000.00
Retained earnings 60,000.00 No. 13 (balancing amount)
Treasury shares 150,000.00
. 13 (balancing amount)
 SHE
₱ 6,968,000.00 PS OS
Par value of outstanding OS -₱ 3,400,000.00 ₱ 3,400,000.00
Par value of outstanding PS -₱ 1,600,000.00 ₱ 1,600,000.00
Liquidation prem. ₱ -
5 years div. in arrears -₱ 960,000.00 ₱ 960,000.00
Ordinary dividends fixed rate -₱ 408,000.00 ₱ 408,000.00
Balance for participation ₱ 600,000.00
Allocated to PS -₱ 192,000.00 ₱ 192,000.00
Allocated to OS -₱ 408,000.00 ₱ 408,000.00
₱ - ₱ 2,752,000.00 ₱ 4,216,000.00
16,000.00 34,000.00
₱ 172.00 ₱ 124.00
No. 14 No. 15

For book value per share problems, subscription receivables are NOT deducted because they are
assumed to be current since the entity is assumed to be a liquidating entity (not a going concern entity).

NOTE: This assumption ONLY APPLIES TO BOOK VALUE PER SHARE PROBLEMS. In other
problems such as Problem 2 in this exam, subscriptions receivable are assumed to be non-current if the
problem is silent.
 # of outstanding shares
PS OS
Issued 15,000.00 30,000.00
Subs. 2,000.00 5,000.00
TS (1,000.00) (1,000.00)
16,000.00 34,000.00
₱ 100.00 ₱ 100.00
₱ 1,600,000.00 ₱ 3,400,000.00 ₱ 5,000,000.00
Ratio 32.00% 68.00%

because they are

a going concern entity).

ROBLEMS. In other
to be non-current if the
 Debit Credit
5-Jan Cash 3,600,000.00
Ordinary share capital 2,000,000.00
Share premium - ordinary 1,600,000.00

28-Jan Treasury shares - ordinary 1,200,000.00

Cash 1,200,000.00

2-Feb Memo entry

13-Feb Memo entry

No. of issued ordinary shares from 55,000 (35,000 + 20,000) to 110,000 shares
Par value per share from P100 to P50 per share
No. of ordinary treasury shares from 6,000 to 12,000 shares
Cost per treasury share from P200 to P100 per share
Donated shares from 5,000 to 10,000 shares
Total authorized ordinary shares from 180,000 to 360,000 shares
No. 1 Answer: No effect

28-Feb Cash 660,000.00

Share premium - treasury 60,000.00
Treasury shares - ordinary 600,000.00

24-Mar Cash 800,000.00

Donated capital increase 800,000.00

15-Jul Equipment 1,440,000.00

Preference share capital 800,000.00
Share premium - preference 640,000.00

6-Aug Computation of outstanding ordinary shares

1-Jan Beginning 70,000.00 adjust for share split
5-Jan Issuance 40,000.00 adjust for share split
28-Jan Repurchase (12,000.00) adjust for share split
2-Feb Donation (10,000.00) adjust for share split
28-Feb Reissuance 6,000.00
24-Mar Reissuance 10,000.00
Shares outstanding 104,000.00
Dividend rate 15%
# of share dividends 15,600.00
Measurement 90.00
1,404,000.00
 Retained earnings 1,404,000.00 No. 3
Ordinary share dividends distributable 780,000.00
Share premium - ordinary 624,000.00

15-Sep Ordinary share dividends distributable 780,000.00

Ordinary share capital 780,000.00

28-Sep Cash 255,000.00

Share premium - treasury 45,000.00 No. 4
Treasury shares 300,000.00

15-Oct Subscriptions receivable 1,080,000.00

Subscribed ordinary share capital 900,000.00
Share premium - ordinary 180,000.00

15-Nov Cash 432,000.00

Subscriptions receivable 432,000.00

27-Nov Cash 648,000.00

Subscriptions receivable 648,000.00

Subscribed ordinary share capital 900,000.00

Ordinary share capital 900,000.00

14-Dec Computation of outstanding shares

PS OS
1-Jan 7,000.00
15-Jul 4,000.00
6-Aug 119,600.00
28-Sep 3,000.00
15-Oct 18,000.00
11,000.00 140,600.00
Dividend rate 24.00 1.50
264,000.00 210,900.00

Retained earnings 474,900.00 No. 5

Cash dividends payable 474,900.00

Cash dividends payable 474,900.00

Cash 474,900.00

31-Dec Income summary 1,000,000.00

Retained earnings 1,000,000.00
31-Dec Retained earnings - unappropriated 300,000.00
Retained earnings - appropriated 300,000.00
 Preference share capital Share premium - preference
1,400,000.00 175,000.00
800,000.00 640,000.00

2,200,000.00 815,000.00

Ordinary share capital Share premium - ordinary

3,500,000.00 1,750,000.00
2,000,000.00 1,600,000.00
780,000.00 624,000.00
900,000.00 180,000.00
7,180,000.00 4,154,000.00

Subscriptions receivable Subscribed ordinary share capital

- -
-

- -

Treasury shares Share premium - treasury

1,200,000.00 600,000.00 45,000.00 60,000.00
300,000.00
No. 2
300,000.00 15,000.00

Retained earnings Donated capital (part of total share premium)

1,404,000.00 4,500,000.00 800,000.00
474,900.00 1,000,000.00

3,621,100.00 800,000.00
Less: Approp. (300,000.00)
Unapprop. 3,321,100.00 No. 6

# of authorized ordinary shares 360,000.00

Less: # of ordinary shares issued (143,600.00)
# of unissued ordinary shares 216,400.00 No. 7

Legal capital of par value shares

Share capital issued 9,380,000.00
Add: Subscribed share capital -
Total legal capital 9,380,000.00 No. 8

Share capital issued 9,380,000.00

Add: Share dividend distributable -
Add: Subscribed share capital -
Less: Subscription receivable (if non-current) -
Add: Share premium
Share premium - preference 815,000.00
Share premium - ordinary 4,154,000.00
Share premium - treasury 15,000.00
Donated capital 800,000.00
Total contributed/paid-in capital 15,164,000.00 No. 9
Add: Retained earnings
Unappropriated 3,321,100.00
Appropriated 300,000.00
Add: Other comprehensive income -
Less: Treasury shares, at cost (300,000.00)
Total Shareholders' Equity 18,485,100.00 No. 10