1. Miami Heat Company reported the following shareholders’ equity on January 1, 2018.

Ordinary Share Capital P 1,500,000

Ordinary Share Premium 3,000,000
Retained earnings 2,000,000

The entity had 400,000 authorized shares of P 5 par value, of which 300,000 shares were issued
and outstanding. On March 1, 2018, the entity acquired 50,000 shares for P 10 per share to be
held as treasury. These shares were originally issued at P 8 per share. On December 31, 2018, the
entity declared and distributed property dividend with a carrying amount of P 750,000 and a
P 1,000,000 fair value. The net income for 2018 was P 2,500,000. What amount should be
reported as Unappropriated retained earnings on December 31, 2018? ____________________

2. In 2018, Lakers Corporation acquired 3,000 shares of its P 20 par value ordinary share capital at
P 72 per share. During 2018, Lakers issued 1,500 of these shares at P 100 per share. What
accounts and amounts should Lakers credit in 2018 to record the issuance of the 1,500 shares?

Treasury Shares Add’l Paid in Capital Retained Earnings Ordinary Share

__________ __________ _________ _________

3. The shareholders’ equity section of Memphis Company as of December 31,2018 before closing its
books and recording the 2018 dividends is as follows:

Ordinary share, 100,000 shares issued and outstanding P 3,000,000

Ordinary share premium 4,000,000
Retained earnings 8,000,000

Memphis’ board of directors declared a 20% share capital dividend on December 31, 2018 when
the market value of each share was P 70. The corporation’s 2018 operations resulted to a loss
P 1,200,000. What amount should Memphis report as retained earnings as of December 31,
2018? ____________________

4. Bulls Corporation was incorporated on January 2, 2018. The following information pertains to
Bulls’ ordinary share transactions during the year.

January 1 Number of shares authorized 40,000

February 1 Number of shares issued 30,000
July 1 Number of shares reacquired but not canceled 2,500
December 1 Four-for- one split

What is the number of Bulls Corporation’s ordinary share outstanding at December 31, 2018?
_________
5. In 2018, Pacers Corporation issued for P 100 per share, 15,000 convertible preference shares of
P 100 par value. One preference share may be converted into three ordinary shares of P 25 par
value at the option of the preference shareholder. On December 31, 2018, all of the preference
shares were converted into ordinary shares. The market value of the ordinary share at the
conversion date was P 40. What amount should be credited to ordinary share capital on
December 31, 2018? _______________

6. The shareholders’ equity of Atlanta Hawks Inc., as of December 31, 2018 consists of 10%
Preference Shares (cumulative and participating) with outstanding shares of 6,000, P 100 par
value; Ordinary Shares of 10,000 with P 40 par value and Retained Earnings of P 800,000.
Dividends were in arrears for 2 years at the start of 2018. Dividends declared for 2018 amounted
to P 200,000.
How much will be in arrears at the end of 2018? ____________________

7. Clippers Corporation had sufficient retained earnings in 2018 as a basis for dividends but was
temporarily short of cash. The entity declared a dividend of P 1,000,000 on April 1, 2018, and
issued promissory notes to the shareholders in lieu of cash. The notes, which were dated April 1,
2018, had a maturity date of March 31, 2019 and a 10% interest rate. How should the scrip
dividend and related interest be recorded?

8. Houston Rockets Company reported the following in its statement of shareholders equity on
January 1, 2018.

Ordinary share capital, P 50 par value, 200,000 shares authorized,

100,000 shares issued P 5,000,000
Additional Paid in Capital 1,500,000
Retained earnings 516,000
Treasury shares at cost (5,000 shares) 400,000

The following events occurred in 2018:

May 1 1,000 treasury shares were sold for P 10,000
July 9 10,000 shares of previously unissued ordinary share were sold for P57 per share.
October 1 Share split 2 for 1

How many shares are outstanding at December 31, 2018? _____________

9. Using the same information given in no. 41. After the split, what will be the cost per share of the
treasury shares? _____________
10. During the current year, Denver Nuggets Corporation received a donation of 2,000 shares with
P 50 par value from a shareholder. On that date, the share market value was P 350. The shares
were originally issued for P 250 per share.

What is the decrease in shareholders’ equity as a result of the donation?

____________________

11. The accounts below appear in the December 31, 2018 trial balance of Utah Jazz Corporation:

Authorized share capital, P 100 par P 5,000,000

Unissued share capital 2,000,000
Property Dividends payable 800,000
Subscribed share capital 1,000,000
Subscription receivable- due 2021 400,000
Share premium 500,000
Retained earnings, unappropriated 600,000
Retained earnings appropriated 300,000
Treasury shares, at cost, P 150 per share 150,000

In its December 31, 2018 statement of financial position, Utah Jazz should report total
shareholders’ equity as ______________________

12. The following accounts are shown on the statement of financial position of Phoenix Corporation

Share Capital, P 100 par, 1,000 shares P 100,000

Share Premium 2,000
Paid in Capital from Treasury Shares 2,000
Retained Earnings 75,000
Treasury shares, 200 shares at cost 25,000

All the 200 treasury shares were sold for P 22,000. How would the resale of the treasury shares
be recorded?

13. The shareholders’ equity of Oklahoma Thunder Inc., contain the following: Ordinary Share
Capital, P 30 par, 25,000 shares; Ordinary Share Premium, P 87,500 and Retained Earnings of
P 150,000. At the end of the year, the original issue of Ordinary Share of P 30 par was replaced by
P 30 stated value.
As a result, the effect on the total Additional Paid In Capital would be ____________________
(indicate increase or decrease)
14. The capital accounts of Knicks Corporation on December 31, 2018 showed the following accounts
included in the shareholders’ equity:

10%Preference Share Capital, 300,000 shares P 15,000,000

Ordinary Share Capital, 3,000,000 shares 30,000,000
Preference Share Premium 3,000,000
Ordinary Share Premium 15,000,000
Retained Earnings 13,500,000

During the year 2019, the following transactions took place.

Jan 2 Issued 7,500 preference shares at P 60 per share
Mar 1 Issued 12,500 ordinary shares at P 25 per share
May 1 2 for 1 share split
July 1 Reacquired 10,000 ordinary shares at P 14 per share
Sept 30 Reissued 7,500 treasury shares at P 16 per share
Dec 31 Profit for the year amounted to P 1,250,000.
Dec 31 Declared regular dividend to preference shares and P 2.00 dividend per share on
ordinary shares.

Prepare the shareholders’ equity section of the statement of financial position of Knicks
Corporation as of December 31, 2019.

15. The following data were taken from the accounts of Miami Heat Corporation as at December 31,
2019:

Total net income since incorporation P 840,000

Proceeds from sale of donated shares 90,000
Scrip dividends declared payable on Jan. 5, 2020 65,000
Ordinary share capital dividend distributable 60,000
Excess of proceeds over cost from sale of treasury shares

What should be the balance of the Retained Earnings as of December 31, 2019? ______________