Reviewer PDF

SHAREHOLDER’S EQUITY QUESTIONNAIRES
1. Munn Co. reported the following equity accounts: preference share capital, par value P15,
2,550,000; share premium, preference share, P150,000; ordinary share capital, no par, P50
stated value, 3,000,000
What is the number of issued and outstanding shares for each class?
Ordinary Preference1
A. 60,000 170,000
B. 60,000 180,000
C. 63,000 170,000
D. 63,000 180,000
2. At the beginning of the current year, Cove Co., a closely-held entity, issued 6% bonds with a
maturity value of P6,000,000 together with 10,000 ordinary shares of P50 par value, for a
combined cash amount of P11,000,000. If the bonds were issued separately, they would have
sold for P4,000,000 on an 8% yield to maturity basis. What amount should be reported for
share premium on the issuance of the ordinary shares?
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A. 7,500,000
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B. 6,500,000
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C. 5,500,000
D. 4,500,000
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3. Beck Co. issued 200,000 ordinary shares when it began operation in 2014 and issued an
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additional 100,000 shares in 2015. The entity also issued preference shares convertible into
100,000 ordinary shares. In 2015, the entity purchased 75,000 ordinary shares to be held in
treasury. On December 31, 2015, how many ordinary shares were outstanding?
A. 400,000
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B. 325,000
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C. 300,000
D. 225,000
4. Pointer Co. issued all of the outstanding shares for P390 per share in 2015. On December
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31, 2015, the entity reacquired 200,000 shares at P360 per share and retired them. The entity
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reported the following shareholder’s equity on same date before the retirement of the shares:
Retained Earnings 75,000,000
Share Premium 162,000,000
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Share capital, P300 par value, 2,000,00
shares authorized, 1,800,000 shares
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issued and outstanding 540,000,000
What is the balance of the share premium immediately after the retirement of the shares?
A. 156,000,000
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B. 150,000,000
C. 144,000,000
D. 168,000,000
5. Ray Co. declared a 5% stock dividend on 100% issued and outstanding shares of P20 par
value, which had a fair value of P50 per share before stock dividend was declared. This stock
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dividend was distributed 60 days after the declaration date. What is the increase in current
liabilities as a result of the stock dividend declaration?
A. 250,000
B. 100,000
C. 150,000
D. 0
6. Solace Co. declared and distributed 10% stock dividend with fair value of P1,500,000 and
par value of P1,000,000 and 25% stock dividend with fair value of P4,000,000 and par value of
P3,500,000. What aggregate amount should be debited to retained earnings of the stock
dividends?
A. 4,500,000
B. 3,500,000
C. 5,000,000
D. 5,500,000
7. On January 1, 2015, Coleen Co. had 220,000 P5 par value shares outstanding. On June 1,
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the entity acquired 20,000 shares to be held in the treasury. On December 1, when the market
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price of the share was P20, the entity declared a 10% share dividend to be issued to
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shareholders of record on December 16, 2015. What was the impact of the share dividend on
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retained earnings?
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A. 100,000 decrease
B. 400,000 decrease rs e
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C. 440,000 decrease
D. No effect
8. At the beginning of the current year, Flash Co. had retained earnings of P4,000,000. During
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the year, the entity reported net income of P2,000,000, sold treasury shares at a “gain” of
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P720,000, declared a cash dividend of P1,200,000, and declared and issued a small share
dividend of P60,000 shares with P10 par value when the fair value of the share was P20. What
is the amount of retained earnings available for dividends at the end of the current year?
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A. 3,600,000
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B. 4,200,000
C. 4,320,000
D. 4,920,000
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9. Ivy Co, an unlisted entity decided to issue 1,000 share options to an employee in lieu of
many years’ service. However, the fair value of the share options cannot be reliably measure as
the entity operates in a highly specialized market where there are no comparable entities. The
exercise price is P100 per share and the options were granted on January 1, 2015 when the
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value of shares was also estimated at P100 per share. On December 331, 2015 the value of the
share was estimated at P150 per share and the option vested on that date. What value should
be placed on the share options issued for the year ended December 31, 2015?
A. 100,000
B. 150,000
C. 50,000
D. 25,000
10. The employee stock purchase plan of Tripoli Co. specifies that for every P100 withheld
from employee’s wages for the purchase of Tripoli’s ordinary shares, Tripoli Co. contributes
P200. The stock is purchase from Tripoli’s treasury shares at market price on the date of
purchase. The following information pertains to the plan’s transactions for the current year:
Employee withholding for the year 350,000
Market value of 150,000 shares issued 1,050,000
Carrying amount of treasury shares issued 900,000
What amount should be recognized as expense in relation to the stock purchase plan?
A. 1,050,000
B. 900,000
C. 700,000
D. 550,000
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11. Elizabeth Co. granted 100 share appreciation rights to each of the 1,000 employees in
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January 2015. The entity estimated that 90% of the awards will vest on December 31, 2017.
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The fair value of each share appreciation right on December 31, 2015 is P10. What is the
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accrued liability on December 31, 2015?
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A. 300,000
B. 900,000
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C. 100,000
D. 90,000
On January 1, 2015, Planet Co. purchased an equipment for the cash price of P5,000,000. The
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supplier can choose how the purchase is to be settled. The choices are 50,000 shares with par
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value of P50 in one year’s time, or a cash payment equal to the market value of 40,000 share
on December 31, 2015. At grant date on January 1, 2015, the market price of each share is
P110 and the date of settlement on December 31, 2015, the market price of each share is
P130.
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12. What is the equity component arising from the purchase of equipment with share and cash
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alternative?
A. 500,000
B. 400,000
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C. 600,000
D. 0
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13. What is the interest expense to be recognized on December 31, 2015 if the supplier has
chosen the cash alternative?
A. 600,000
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B. 400,000
C. 800,000
D. 0
On January 1, 2015, Planet Co. purchased an equipment for the cash price of P5,000,000. The
supplier can choose how the purchase is to be settled. The choices are 50,000 shares with par
value of P50 in one year’s time, or a cash payment equal to the market value of 40,000 share
on December 31, 2015. At grant date on January 1, 2015, the market price of each share is
P110 and the date of settlement on December 31, 2015, the market price of each share is
P130.
14. What is the share premium to be recognized on December 31, 2015 if the supplier has
chosen the cash alternative?
A. 600,000
B. 400,000
C. 800,000
D. 0
15. What is the share premium on December 31, 2015 if the supplier has chosen the share
alternative?
A. 5,000,000
B. 2,500,000
C. 4,400,000
D. 4,000,000
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SHE IA & Practical Accounting Questionnaires
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IA Problem 20-10
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Mara Company provided the following data at year-end:
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Authorized share capital 5,000,000
Unissued share capital rs e 2,000,000
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Subscribed share capital 1,000,000
Subscription receivable 400,000
Share premium 500,000
Retained earnings unappropriated 600,000
Retained earnings appropriated 300,000
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Revaluation100 surplus 200,000
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What total amount should be reported as shareholders’ equity?
A. 5,200,000
B. 5,500,000
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C. 4,900,000
D. 4,800,000
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IA Problem 20-11
Bronze Company provided the following information at year-end:
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Share capital, 5,000,000; subscribed share capital, 3,000,000; subscription receivable,

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2,000,000; share premium, 1,500,000; cumulative translation loss, 500,000; treasury shares at
cost, 700,000; retained earnings, 1,000,000; cumulative unrealized gain on futures contract
designated as cash flow hedge, 600,000
sh
What is the contributed capital at year-end?
A. 9,500,000
B. 7,500,000
C. 8,500,000
D. 6,800,000
IA Problem 20-12
On January 1, 2020, Negros Company was incorporated with the following authorized
capitalization: ordinary share capital, no par, P100 stated value, 20,000,000; preference share
capital, 10%, P50 par, 10,000,000. During the year, the entity issued 150,000 ordinary shares
for a total of P18,000,000 and 50,000 preference shares at P60 per share. In addition, on
December, 15, 2020, subscription for 20,000 preference share were taken at a purchase price
of P100. These subscribed shares were paid for on January 15, 2021. Net income for 2020 was
P5,000,000.
What amount should be reported as total contributed capital on December 31, 2020?
A. 28,000,000
B. 21,000,000
C. 23,000,000
D. 26,000,000
IA Problem 20-13
At the beginning of the current year, Ashe Company was organized with authorized share
capital of 100,000 shares of P200 par value. During the year, the entity had the following
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transactions affecting shareholder’s equity.
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January 10 Issued 25,000 shares at P220 a share
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March 25 Issued 1,000 shares for legal services when the fair value was P240 a share
September 30 Issued 5,000 shares for a tract of land when the fair value was P260 a share
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What amount should be reported as share premium at year-end?
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A. 840,000
B. 800,000
C. 540,000
D. 500,000
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IA Problem 20-14
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Glee Company revealed the following shareholder’s equity: preference share capital, P100 par,
2,300,000; share premium-preference shares, 805,000; ordinary share capital, P15 par,
5,250,000; share premium-ordinary shares, 2,750,000; subscribed ordinary share capital,
500,000; subscription receivable-ordinary shares, 400,000; retained earnings, 1,900,000
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What is the amount of legal capital?
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A. 8,050,000
B. 7,650,000
C. 9,950,000
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D. 11,605,000
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IA Problem 20-15
East Company issued 1,000 shares20-17. with P5 par to Howe as compensation for 1,000
hours of legal services performed. Howe usually bills P160 per hour for legal services. On the
date of the issuance, the share was trading on a public exchange at P140. By what amount
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should share premium increase as a result of the transaction?
A. 135,000
B. 140,000
C. 155,000
D. 160,000
IA Problem 20-17
Remington Company issued 10,000 ordinary shares with P200 par value and 20,000
preference shares with P200 par value for a total consideration of P8,000,000. At the date of
issue, the ordinary share was selling for P360 and the preference share was selling for P270.
1. What amount of the proceeds should be allocated to the preference shares?
A. 6,000,000
B. 5,400,000
C. 4,800,000
D. 4,400,000
2. What amount of the proceeds should be allocated to the ordinary shares?
A. 3,600,000
B. 2,000,000
C. 3,200,000
D. 4,000,000
3. What is the share premium from the issuance of preference shares?
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A. 1,800,000
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B. 1,000,000
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C. 800,000
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D. 0
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4. What is the share premium from the issuance of ordinary shares?
A. 2,000,000
rs e
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B. 1,600,000
C. 1,200,000
D. 0
IA Problem 20-18
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On January 1, 2020, Penn Company began operations by issuing at P15 per share one-half of
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the 950,000 ordinary shares of P10 par value that had been authorized for sale. In addition, the
entity has 500,000 authorized preference shares of P5 par value. During 2020, the entity had
P1,025,000 of net income and declared P230,000 of dividend.
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During 2021, the entity had the following transactions:
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Issued 100,000 ordinary shares for P17 per share
Issued 150,000 preference shares for P8 a share
Authorized the purchase of a custom-made machine to be delivered on January 2022
The entity restricted P300,000 of retained earnings for the purchase of the machine.
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Issued additional 50,000 preference shares for P9 per share
Reported P1,215,000 of net income and declared on December 31, 2021 a cash dividend of
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P365,000 to shareholders of record on January 15, 2022 to be paid on February 1, 2022.
1. What is the shareholder’s equity on December 31, 2020?
A. 7,920,000
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B. 7,125,000
C. 8,150,000
D. 8,380,000
2. What is the shareholder’s equity on December 31, 2021?
A. 11,850,000
B. 11,550,000
C. 12, 845,000
D. 10,635,000
IA Problem 20-19
Orlando Company issued 8,000 convertible preference shares with P100 par value at P105 par
share. One preference share can be converted into three ordinary shares with P25 par value at
the option of the shareholder. Subsequently, all preference shares were converted into ordinary
shares. The market value of the ordinary share on the date of conversion was P30. What
amount should be credited to share premium as a result of the issuance of the preference
shares and the subsequent conversion into ordinary shares?
A. 120,000
B. 240,000
C. 200,000
D. 80,000
IA Problem 20-20
During the current year, Hyatt Company issued for P110 per share, 15,000 convertible
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preference shares of P100 par value. One preference share may be converted into three
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ordinary shares with P25 par value at the option of the preference shareholder. All of the
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reference shares were converted into ordinary shares at year-end. The market value of the
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ordinary share at the conversion date was P40.
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1. What amount should be credited to ordinary share capital as a result of the conversion at
year-end?
rs e
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A. 1,125,000
B. 1,500,000
C. 1,650,000
D. 1,800,000
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2. What amount should be credited to share premium as a result of the conversion at year-
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end?
A. 375,000
B. 525,000
C. 150,000
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D. 0
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PA Problem 24-3
At the beginning of the current year, Ria Company issued 10,000 ordinary shares of P20 par
value and 20,000 convertible preference shares of P20 par value for a total of P800,000. At this
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date, the ordinary share was selling for P36 and the convertible preference share was selling
for P27.
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1.What amount of the proceeds should be allocated to the preference shares?
A. 600,000
B. 540,000
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C. 480,000
D. 440,000
2.What amount of the proceeds should be allocated to the ordinary shares?
A. 360,000
B. 200,000
C. 320,000
D. 400,000
3.What amount should be recorded as share premium from the issuance of preference shares?
A. 180,000
B. 100,000
C. 80,000
D. 0
4. What amount should be recorded as share premium from the issuance of ordinary shares?
A. 200,000
B. 160,000
C. 120,000
D. 0
PA Problem 24-9
At the beginning of current year, Guess.Company was organized and authorized to issue
100,000 shares with P50 par value. During the current year, the entity had the following
transactions relating to shareholders' equity:
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Issued 10,000 shares at P70 per share.
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Issued 20,000 shares at P80 per share.
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Reported net income ofP1,000,000.
Paid dividends of P200,000.
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Purchased 3,000 treasury shares at P100 per share.
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1. What amount should be reported as share capital at year-end?
A. 1,500,000
B. 3,300,000
C. 1,200,000
D. 1,800,000
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2.What amount should be reported as share premium at year-end?
A. 800,000
B. 200,000
C. 600,000
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D. 0
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3.What amount should be reported as total shareholders’ equity at year-end?
A. 2,800,000
B. 3.000,000
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C. 3,300,000
D. 2,000,000
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4. What amount should be reported as contributed capital at year-end?
A. 2,300,000
B. 1,500,000
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C. 3,000,000
D. 2,000,000
IA Problem 21-9
Nerve Company was organized in January 1, 2020. On that date, the entity issued 200,000 P10
par value shares at P15 per share. During the period January 1, 2020, through December 31,
2020, the entity reported a net income of P750,000 and paid cash dividends of P380,000. On
January 5, 2021, the entity purchased 12,000 treasury shares at P12 per share. On December
31, 2021, 8,000 treasury shares were sold at P8 per share and retired the remaining 4,000
shares.
What is the shareholder’s equity on December 31, 2021?
A. 3,290,000
B. 3,306,000
C. 3,338,000
D. 3,370,000
IA Problem 21-10
Caper Company disclosed the following shareholders’ equity at the beginning of current year:
Share capital, par value P20 authorized 50,000
shares; issued and outstanding, 30,000 shares 600,000
Share premium 150,000
Retained earnings 230,000
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During the year, the following transactions occurred relating to SHE:
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1,000 shares were reacquired at P28 per share
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900 shares were reacquired at P30 per share
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1,500 shares of treasury were sold at P32 per share
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The entity reported a net income of P110,000 for the current year. What amount should be
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reported as shareholders’ equity at year-end?
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A. 1,071,000
B. 1,078,000
C. 1,083,000
D. 973,000
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IA Problem 21-11
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At the beginning of the current year, Dorr Company approved a two-for-one split of the entity’s
share capital, and an increase in authorized shares from 100,000 P20 par value shares to
200,000 P10 par value shares. The shareholders’ equity accounts immediately before issuance
of the share split shares were as follows: share capital, par value P20, 50,000 shares
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outstanding, 1,000,000; share premium P3 per share on issuance, 150,000; retained earnings,
1,350,000. What should be the balance in the share premium and retained earnings accounts
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immediately after the share split is effected?
A. 0; 500,000
B. 150,000; 350,000
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C. 150,000; 1,350,000
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D. 1,150,000; 350,000
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SHAREHOLDER’S EQUITY QUESTIONNAIRES

Retained Earnings 75,000,000

Share Premium 162,000,000

Share capital, P300 par value, 2,000,00

shares authorized, 1,800,000 shares

issued and outstanding 540,000,000

Employee withholding for the year 350,000

Market value of 150,000 shares issued 1,050,000

Carrying amount of treasury shares issued 900,000

Unissued share capital rs e 2,000,000

Subscription receivable 400,000

Share premium 500,000

Retained earnings unappropriated 600,000

Retained earnings appropriated 300,000

Revaluation100 surplus 200,000

What total amount should be reported as shareholders’ equity?

Bronze Company provided the following information at year-end:

Share capital, 5,000,000; subscribed share capital, 3,000,000; subscription receivable,

What is the contributed capital at year-end?

What is the amount of legal capital?

should share premium increase as a result of the transaction?

1. What amount of the proceeds should be allocated to the preference shares?

2. What amount of the proceeds should be allocated to the ordinary shares?

3. What is the share premium from the issuance of preference shares?

During 2021, the entity had the following transactions:

Issued 100,000 ordinary shares for P17 per share

Issued 150,000 preference shares for P8 a share

Authorized the purchase of a custom-made machine to be delivered on January 2022

Issued additional 50,000 preference shares for P9 per share

P365,000 to shareholders of record on January 15, 2022 to be paid on February 1, 2022.

1. What is the shareholder’s equity on December 31, 2020?

2. What is the shareholder’s equity on December 31, 2021?

1.What amount of the proceeds should be allocated to the preference shares?

2.What amount of the proceeds should be allocated to the ordinary shares?

Paid dividends of P200,000.

2.What amount should be reported as share premium at year-end?

3.What amount should be reported as total shareholders’ equity at year-end?

4. What amount should be reported as contributed capital at year-end?

What is the shareholder’s equity on December 31, 2021?

Share capital, par value P20 authorized 50,000

shares; issued and outstanding, 30,000 shares 600,000

Share premium 150,000

Retained earnings 230,000

immediately after the share split is eﬀected?

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