para BT Shareholders’ Equity Problem 4 ‘The following is a sumr DE ee can eee cera Corporation since It was 8, . a q byes ac were authorized and 7,000 shares of ordinary share capital (P50 par alin) AG Pa Aa ea YS Fe distributed as bonus issue rele its ing for P62. Three hundred shares of ordinary share capital were 2 cost of P66 per share. These 300 shares are stil in the company treasury. 1n 2009, 10,000 preference shares were authorized and the company issued 4,000 of them (P00 par value) at P113. Some of the preference she ital px vale eaoeeSt ewweremat ae mere 7 oS Se ‘The corporation has eared a total of P610,000 in profits after income taxes and paid out a ta) o1'P312,600 in cash dividends since Incorporation. An appropriation was made in 2010 by the Board of Directors from retained earings in the amount of 75,000 for Fixed Asset Replacements. Required: Prepare the Shareholders" equity section ofthe statement of financial position in proper form for Pathways Corporation as of December 31, 2010. —— 5 Morris Corporation is publicly owned, and its shares are traded 0 2 national stock exchange. Morris has 30,000 shares of P20 stated value ordinary share capital. Only 50% of these shares have been issued, and of the shares issued, only 11,000 are outstanding. On December 31, 2009, the Shareholders’ Equty section revealed that the total bance 0 or cal Paid in Capital was P4,160,000 and the Retained Farnliah balance was P1,100,000- ‘Treasury shares were purcha an cost of P37-50 per share.I = = — —__. prema May 1 Morris dectared a 1 0% room area bonus issue to be distributed on June 1 to shareholders of ‘The market price of the ordinary share was P55 on May 1. May 31 Mortis sold 150 treasury shares 7 z 000 Teacquired on April 15 and an additional 2, shares that had been ini ing price was Pay per at had been on hand since the begining of the year. The selling p June 1 ‘Morris distributed the bonus issue. Sept. 15, ‘The semi-annual cash dividend on ‘ordinary share was declared amounting to P1.50 Per share. Morris also declared the annual dividend on preference share. Both are Payable on October 15 to shareholders of record on October 1. Oct. 15 Morris paid the dividends. Dec. 31. Profit was P500,000. REQUIRED: Compute the following at December 31, 2010: (a) The number of shares and the peso amount of treasury shares (©) The number of shares and the peso amount of preference shares (©) The number of shares and the peso amount of ordinary shares (d) The total amount of additional paid in capital (@) The total amount of retained earnings.Items 1 through 5 are based on the following information: Foldets! a eects ae Section of Webster, Inc. showed the following data on December 31, cutstanding, 750,000," P3 ‘Par; 300,000 shares authorized, 250,000 shares issued and Retained Caring tracy eee P7,050,000; Share Options Outstanding, P150,000; them the right to acquit ene share options were granted to key executives and provided ire 30,000 ordinary shares at P35 per share. The company assigned fair value to the options at the date of grant based on IFRS 2." ey The following transactions occurred during 2010: Mar. 31 Key executives exercised 4,500 options outstanding at December 31, 2009, The market price per share was P44 at this date. April1 The company issued 10%, ten year bonds of P2,000,000 at face, giving each P1,000 bond a detachable warrant, enabling the holder to purchase two shares of ‘ordinary at P40 each for a one year period. The bonds would have sold to yield 12%. Interest is payable annually at March 31. (Round present value factor to five decimal places) June 30 The company issued rights to shareholders (one right on each share, exercisable within a 30-day period) permitting holders to acquire one share at 40 for every 10 rights submitted. Shares were selling for 43 at this time. All but 6,000 rights were exercised on July 31, and the additional shares were issued. All warrants issued with the bonds on April 1 were exercised,5. What is the carrying value of the bonds on December 31, 2010? a. P2,000,000 b. 1,773,986 canes ‘The Retained Eamings account of Lovely Company follows: Date Debit 01.01.2009 Balance oa na 03.31.2009 Dividends declared 000 12312009 Profit for the year cor oo 04.01.2010 Share premium ioe 06.30.2010 Gain on sale of treasury shares scone 99.30.2010 Dividends declared 300,000 12,31.2010 Profit for the year 451,000 12.31.2010 Appraisal increase of land Ome 12.31.2010 Balance 4,310,000 The only other shareholders’ equity account in the books of the company as of December 31, 2010 is ordinary share capital, which has a balance of 2,000,000. This is composed of 20,000 issued shares with par value of P100. All of these shares are outstanding as of December 31, 2010, 6. The correct balance of Retained Earnings as of December 31, 2010 is ‘a. 760,000 _ P1,060,000 b. _P860,000 4. 1,310,000 7. Additional Paid in Capital is a. 100,000 b. _P150,000