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AE211 - SHE 1 Exercises

The document provides details of two problems involving transactions related to shareholders' equity for two companies, Apple Company and Grapes Company. It includes information on share issuances, subscriptions, payments, retirements, splits and donations. Requirements include preparing journal entries for the transactions and calculating ending balances for various shareholders' equity accounts.

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23 views2 pages

AE211 - SHE 1 Exercises

The document provides details of two problems involving transactions related to shareholders' equity for two companies, Apple Company and Grapes Company. It includes information on share issuances, subscriptions, payments, retirements, splits and donations. Requirements include preparing journal entries for the transactions and calculating ending balances for various shareholders' equity accounts.

Uploaded by

martinfaith958
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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1 AE211: Intermediate Acctg.

2
Prepared by: Bernadette Adelaida M. Cope

- EXERCISES on SHAREHOLDERS’ EQUITY – PART 1 -

Problem 1:

APPLE Company was organized at the beginning of the current year and was authorized to issue share
capital of 200,000 ordinary shares with par value of ₱20. The following transactions occurred during
the year:
• Received subscriptions at par value from incorporators equal to 45% of the authorized share
capital
• Received 60% down payment on the subscriptions from the incorporators
• Received full payment on 50,000 shares originally subscribed
• An equipment was acquired by issuing 5,000 shares. Share are currently traded at this time
at ₱25/share.
• Received subscriptions to 10,000 shares at ₱28/share
• Partially collected 50% of the amount subscribed on the latest subscriptions.
• Collected in full 90% of the latest subscription. 10% defaulted, thus the corporation offered the
shares on a public auction and awarded it to the highest bidder who paid the delinquency
balance and the incurred ₱5,000 auction expense.
• Net income for the year-ended was ₱800,000.

Requirements:
A. Prepare all necessary journal entries for the current year.
B. Compute for the following:
1. How much did the highest bidder pay the corporation?
2. What is the balance of the subscriptions receivable at year-end?
3. What is the balance of the share capital as of year-end?
4. What is the balance of the subscribed share capital at year-end, assuming the subscriptions
receivable is current?
5. What is the balance of share premium at year-end?
6. How much is the corporation’s legal capital?
7. How much is the total shareholders’ equity at year-end?
2 AE211: Intermediate Acctg. 2
Prepared by: Bernadette Adelaida M. Cope

Problem 2:

GRAPES Company provided the following data for the year:


• Sold 25,000 preference shares, 12%, ₱50 par, at ₱75
• Sold 80,000 ordinary shares of ₱10, par at ₱45.
• Purchased and retired 10,000 preference shares at ₱60
• Purchased 5,000 ordinary shares at ₱40 to be held as treasury
• Sold 3,000 treasury ordinary shares at ₱50
• Share split up for ordinary shares, 2 for 1
• Shareholders donated 10,000 ordinary shares. One half of these were sold for ₱20
• Retired 500 treasury ordinary shares
• Net income for the year was ₱2,500,000
• Appropriated retained earnings equal to the balance of treasury shares.

Requirements:
C. Prepare all necessary entries for the year.
D. Compute or provide the answers for the following:
8. What is the balance of preference share capital at year-end?
9. What is the balance of ordinary share capital at year-end?
10. What is the total balance of treasury shares at year-end?
11. What is the total outstanding ordinary shares at year-end?
12. What is the total issued shares at year-end (add preference and ordinary)
13. How much is the balance of the shareholders’ equity at year-end?
14. How much is the total legal capital?
15. How much the total contributed capital?

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