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PROBLEM 1. A partial list of the accounts and ending account balances taken from the post- e
closing trial balance of LEE CORPORATION on December 31, 2024 is shown as follows:

Account Amount
Accumulated profits- unappropriated P410,000
Bonds payable 220,000
Ordinary shares subscribed 50,000
Long-term investments in equity securities 210,000
Additional paid-in capital on ordinary shares 460,000
Premium on bonds payable 30,000
Authorized ordinary shares at P10 par value 900,000
Preference shares subscribed 45,000
Additional paid-in capital on preference shares 112,000
Authorized preference shares at P50 par value 400,000
Gain on sale of treasury shares 4,000
Unrealized increase in value of securities available for sale 3,000
Ordinary share warrants outstanding 20,000
Unissued ordinary shares 500,000
Unissued preference shares 100,000
Cash dividends payable-preference 50,000
Donated Capital 25,000
Reserve for bond sinking fund 220,000
Reserve for depreciation 150,000
Revaluation increment in properties 100,000
Subscription receivable-preference (long term) 15,000
Subscription receivable-common (long term) 20,000

REQUIREMENT: Compute the following:

1. Ordinary shares issued
2. Preference shares issued
3. Additional paid-in capital
4. Total legal capital
5. Total stockholder’s equity
PROBLEM 2: The stockholder’s equity of the WPC as of December 31, 2023 was as follows:

Common Stock, P10 par, authorized 300,000

shares ; 250,000 shares issued and outstanding P2,500,000
Paid-in capital in excess of par 3,750,000
Retained Earnings 1,800,000
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On June 1, 2024, WPC reacquired 40,000 shares of its common stock at P40 per share. The e
following transactions occurred in 2024 with regard these shares:
Jul. 1- Sold 15,000 treasury shares at P45.
Jul. 15- 2 for 1 share split
Aug.15- Sold 34,000 treasury shares at P15.
Sep. 1- Retired 2,000 shares.
Based on the information provided, determine the correct balances of the following:
1. Treasury stock
2. Common Stock
3. Paid in capital in excess of par
4. Paid in capital from treasury stock
5. Retained Earnings

PROBLEM 3. In the course of your first time audit of JENNIE Inc’s stockholder’s equity
accounts for the audit year 2024, the following schedule of the company’s stockholder’s equity
accounts as of December 31, 2023 were presented by the client:

Ordinary share capital, P100 par; 200,000 shares authorized;50,000

shares issued and outstanding; options to purchase 10,000 shares at
P100 per share are held by employees, no value having been
assigned to these options P5,000,000
Share Premium from ordinary shares 1,000,000
Accumulated profits 3,000,000

Further investigation and inquiry revealed the following information:

a. The options referred to above were granted to each of its 100 employees on January 1,
2022, which shall vest three years thereafter provided employees remain in the
company’s employ and provided further that sales increase at least by an average of 5%
per year. If the sales increase by an average of at least 5% per year, each year, employees
shall receive 100 share options. If the sales increase by at least 10% per year, each
employee shall receive 200 share options If the sales increase by an average at least 15%
per year, each employee shall receive 300 options.
The fair value of each share option on the grant date was P30 per share. No employee left
the company during the said vesting period. Records show the average sales increase over
the inclusive vesting period are: 2022, 8%; 2023, 10%, and 2024, 13%.
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b. On May 1, 2024, the company issued bonds of P5,000,000 at 120 giving each P1,0000 e
bond a warrant enabling the holder to purchase 4 shares at P120 per share for a one year
period. Shares were selling for P140 at this time. The market value of bond ex-warrant is
105.
c. On June 1, 2024, half of the warrants issued with bonds were exercised.
d. On August 1, the company issued rights to shareholders, permitting holders to acquire for
a 60-day period, 1 share at P130 with every 5 rights submitted. Share were selling for
P150 at this time. All but 5,000 of these rights were exercised and additional shares were
issued.
e. The company declared a P5 per share cash dividends on December 15, 2024 payable to
stockholders as of December 31, 2024 on January 31, 2025.
f. Net income before any adjustments amounted to P2,500,000 in 2024.

1. What is the retroactive adjustment to the beginning accumulated profits account related to
options granted in 2022?
2. What is the correct credit to the share premium account as a result of the exercise of
rights referred to in item d?
3. What is the total APIC to be presented in the stockholder’s equity portion of the balance
sheet as Dec. 31, 2024?
4. What is the correct Accumulated Profits as of Dec. 31, 2024?

PROBLEM 4. On December 1, ABC Company declares a property dividend of one share of

SMC ordinary share for every 5 shares of ABC distributable on January 31 of the following year.
XYZ ordinary shares have a carrying amount of P55 per share, equal to the original cost. The
total outstanding ABC shares is 10,000. XYZ share were held as trading securities.

XYZ shares were quoted at P60 per share on Dec. 1, P63 per share on December 31 and P65 per
share on January 31.

1. Entry to record the declaration of property dividends would include a debit to retained
earnings at______
2. The carrying value of property dividends on Dec. 31 shall be:
3. Entry on January 31 upon distribution of the dividends shall involve a credit to gain at
_______
PROBLEM 5. On October 31, 2024, ABC Inc. declared a building held as owner-occupied
property with an original life of 10 years as dividend distributable to stockholders on January 31
of the following year. This was acquired at P800,000 on October 31, 2023. The property had a
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fair market value of P900,000 on December 31, 2024. On December 31, 2024 the value of the e
property declined to P700,000.
The property was transferred to shareholder’s on January 31 when prevailing fair value was at
P800,000.
1. Entry to record the declaration of the property dividends would include a debit to RE
of_______
2. How much is the property dividends payable should be reported in the SFP?
3. How much should be charged to P/L as a result of the remeasurement of the property
dividends payable by Dec. 2024?
4. How much should be charged to P/L as a result of the remeasurement of the property
dividends payable by Dec. 2024?
5. Gain or loss to be recognized in the P/L as a result of the distribution of the property
dividends?