Scribd Logo
Upload

Welcome to Scribd!

  • 212 views

    Comprehensive Problem - PROBLEM NO.3

    Uploaded by

    Rosalie Colarte Langbay
    The document provides financial information about Marianne Corporation's shareholders' equity accounts as of December 31, 2015 and describes transactions that occurred in 2016. These transactions include the issuance and exercise of stock rights, conversion of preference shares to ordinary shares, reissuance of treasury shares, and the recording of an adjusting entry to correct prior period rent income. The questions ask to calculate account balances as of December 31, 2016 based on this information.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd

    Comprehensive Problem - PROBLEM NO.3

    Uploaded by

    Rosalie Colarte Langbay
    212 views2 pages
    The document provides financial information about Marianne Corporation's shareholders' equity accounts as of December 31, 2015 and describes transactions that occurred in 2016. These transactions include the issuance and exercise of stock rights, conversion of preference shares to ordinary shares, reissuance of treasury shares, and the recording of an adjusting entry to correct prior period rent income. The questions ask to calculate account balances as of December 31, 2016 based on this information.

    Copyright

    © © All Rights Reserved

    Available Formats

    DOCX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    The document provides financial information about Marianne Corporation's shareholders' equity accounts as of December 31, 2015 and describes transactions that occurred in 2016. These transactions include the issuance and exercise of stock rights, conversion of preference shares to ordinary shares, reissuance of treasury shares, and the recording of an adjusting entry to correct prior period rent income. The questions ask to calculate account balances as of December 31, 2016 based on this information.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    212 views2 pages

    Comprehensive Problem - PROBLEM NO.3

    Uploaded by

    Rosalie Colarte Langbay
    The document provides financial information about Marianne Corporation's shareholders' equity accounts as of December 31, 2015 and describes transactions that occurred in 2016. These transactions include the issuance and exercise of stock rights, conversion of preference shares to ordinary shares, reissuance of treasury shares, and the recording of an adjusting entry to correct prior period rent income. The questions ask to calculate account balances as of December 31, 2016 based on this information.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    You are on page 1of 2

    PROBLEM NO.

    3 Comprehensive Problem
    Marianne Corporation had the following shareholders’ equity account balances at December 31, 2015:

    10% Convertible preference shares (₱100 par value; 100,000 shares authorized,
    40,000 shares issued and outstanding) ₱4,000,000
    Ordinary shares (₱10 par value; 200,000 shares authorized, 84,000 shares issued ) 840,000
    Subscribed ordinary shares  100,000
    Subscriptions Receivable  52,000
    Share Premium 968,000
    Retained earnings 15,000,000
    Total  ₱20,948,000
    Less: Treasury ordinary shares (4,000 shares) 44,000
    Total Shareholders' Equity ₱20,904,000

    The subscribed ordinary shares account is composed of 10,000 shares subscribed at ₱13 per share. The
    subscription contract required a cash down payment equal to 60% of the subscription price, with the
    balance due on February 1, 2016.

    Transactions in 2016:
    1. On February 1, 2016, the 8,000 ordinary shares were issued according to subscription contract.
    Because of default by a subscriber, 2,000 shares were not issued. All payments made by the
    subscriber were forfeited in favor of the Company.
    2. On March 1, 2016, 2,000 preference shares were converted to ordinary shares. One preference
    share is convertible into two ordinary shares.  At the time of conversion, the preference shares
    had a market value of ₱125 while the ordinary shares had a market value of ₱25 per share.

    3. On April 1, 2016, 92,000 share rights were issued to the ordinary shareholders permitting the
    purchase of two new shares of ordinary share in exchange for one right and ₱15 cash.  On April
    25, 2016, 67,500 stock rights were exercised when the market price of Marianne’s ordinary
    shares was ₱20 per share. Marianne issued new shares to settle the transaction.  The remaining
    24,500 rights were not exercised and thus expired.

    4. On September 30, 2016, 3,000 treasury shares were reissued at ₱20 per share.

    5. On January 15, 2017, before the accounting records were closed for 2016, Marianne became
    aware that the rent income for the year ended December 31, 2015 was understated by ₱400,000. 
    The after tax-effect on the 2015 net income was ₱280,000.  The appropriate correcting entry was
    recorded the same day.

    6. After correcting the rent income, net income for 2016 was ₱2,500,000

    7. Cash dividends are declared for preference and ordinary shares on April 30 and October 31. 
    Semi-annual cash dividends for ordinary shares are ₱1 per share.

    Questions:
    Based on the above data, determine the following as of December 31, 2016:
    1. Preference shares
    a. ₱4,000,000 c.   ₱3,500,000
    b. ₱3,860,000 d.   ₱3,800,000

    2. Ordinary shares
    a. ₱2,530,000 c.   ₱2,310,000
    b. ₱2,270,000 d.   ₱2,520,000

    3. Total share premium


    a. ₱1,845,600 c.   ₱1,839,600
    b. ₱1,908,600 d.   ₱1,925,100

    4. Retained earnings – unappropriated


    a. ₱16,932,000 c.   ₱16,652,000
    b. ₱16,552,000 d.   ₱16,355,000

    5. Total shareholders’ equity


    a. ₱24,881,600 c.   ₱24,601,600
    b. ₱24,501,600 d.   ₱24,300,100

    You might also like