ACC 109 P1_QUIZ #1

Name: ____________________________________ Section: ______________________________

INSTRUCTIONS: MARK THE LETTER CORRESPONDING TO YOUR ANSWER BY CIRCLING IT WITH A PEN. ANY ATTEMPT TO ERASE YOUR
RESPONSE WILL BE DEEMED INCORRECT.

1. Shares that have a fixed per-share amount printed on the share certificate are called
A. Fixed value shares C. Stated value shares
B. Par value shares D. Uniform value shares
2. If shares are issued for noncash consideration, the proceeds shall be measured by the
A. Par value of the shares issued C. Cost of the noncash consideration received
B. Fair value of the shares issued D. Fair value of the noncash consideration received
3. Share premium is reported
A. As a reduction of shareholders' equity C. As a noncurrent liability
B. As a noncurrent asset D. As an increase in shareholders' equity
4. The total cost of treasury shares shall be reported as
A. Financial asset C. Deduction from retained earnings
B. Deduction from share premium D. Deduction from shareholders' equity
5. The maximum number of shares of common stock that may be issued according to the corporation’s character is referred to
as the
A. Authorized shares. C. Issued shares.
B. Outstanding shares. D. Unissued shares

6. ABC Company revealed the following shareholders' equity at year-end:

Preference share capital, P100 par 2,300,000
Share premium - PS 805,000
Ordinary share capital, P15 par 5,250,000
Share premium 2,750,000
Subscribed ordinary share capital 500,000
Retained earnings 1,900,000
Note payable 4,000,000
Subscriptions receivable - ordinary 400,000

How much is the legal capital?

A. 7,650,000 C. 8,050,000
B. 9,950,000 D. 11,605,000

Preference Share Capital- legal capital = @ Par only (since PS is always issued par value) 2,300,000
Ordinary Share Capital- legal capital= @ Par + SP-OS since the OS was issued > par 5250,000 + 500,000 +2750,000
ANSWER: 10, 800,000 (BONUS)

7. In 2023, ABC Company issued 5,000 shares of P10 par value for PI00 per share. In 2024, the entity acquired 2,000 of the shares
at P150 per share and immediately canceled these 2,000 shares. In connection with the retirement of the shares, what amount
is debited respectively to share premium and retained earnings?
A. 20,000 and 280,000 C. 100,000 and 180,000
B. 180,000 and 100,000 D. 280,000 and 0

Retirement:
DR: Share Capital (@par) 20,000
DR: SP (2,000 shares x (100-10)) 180,000
DR: RE (balancing figure) 100,000
CR: Cash (@cost) 300,000

ABC Company was organized at the beginning of the current year and was authorized to issue share capital of 100,000 shares of P50
par value.

The following transactions occurred during the year in connection with the share capital:
I. The incorporators subscribed for 25% of the authorized share capital at par value.
II. The incorporators paid 25% on their subscription.
III. Full payment was received on 15,000 shares originally subscribed.
IV. Land with fair value of P600,000 was acquired upon issuance of 10,000 shares. The market value of the share at this time is
P55.
V. Cash subscription to 5,000 shares at P60 per share was received.
VI. Issued 2,000 shares to the legal counsel in payment for his P100,000 bill for organization services.

Required:
8. Prepare journal entries to record the transactions I, II, III, IV, V, and VI using the journal entry method. Write your answers in a
separate yellow sheet of paper.

In your examination on the above information, you are to determine the balances of the following:
9. Ordinary share capital
a. 1,450,000 c. 1,600,000
b. 1,550,000 d. 1,700.000
10. Subscribed ordinary share capital
ACC 109 P1_QUIZ #1
a. 400,000 c. 600,000
b. 500,000 d. 700,000
11. Subscribed receivable
a. 375,000 c. 450,000
b. 425,000 d. 525,000
12. Share Premium
a. 150,000 c. 180,000
b. 175,000 d. 195,000
13. Total Shareholders’ equity
a. 1,875,000 c. 2,100,000
b. 1950,000 d. 2,150,000

ABC Company reported the following shareholders' equity:

Ordinary share capital, 50,000 shares, P100 par 5,000,000
Share premium 200,000
Retained earnings 2,000,000

Subsequently, the following transactions, among others occurred:

I. Treasury shares of 5,000 were acquired at P160 per share.
II. Assuming the treasury shares were reissued for P1,000,000.
III. Assuming the treasury shares were reissued for P700,000.

➢ Required:
14. Prepare journal entries to record the transactions I, II, and III.
15. Prepare journal entry to record the retirement of the treasury shares, assuming the treasury shares are not reissued. The
original issue price of treasury shares was P104 per share.
ACC 109 P1_QUIZ #1