PAMANTASAN NG LUNGSOD NG VALENZUELA

FINANCIAL ACCOUNTING AND REPORTING – Part II

QUIZ 08: SHAREHOLDERS’ EQUITY SET A

NAME: SECTION: SCORE:

INSTRUCTION: Choose the BEST answer for each of the following items. Write your answer in the space
provided. STRICTLY NO ERASURE ALLOWED.

PROBLEM 1
Belle Corp. has two classes of share capital outstanding: 12%, P100 par value preference share and P50 par
value ordinary share. Balances on January 1, 2017 were as follows:
Preference share capital – 5,000 shares P 500,000
Ordinary share capital – 50,000 shares 2,500,000
Share premium – Preference 200,000
Share premium – Ordinary 2,000,000
Accumulated profits 4,000,000

The following data summarize the transactions for 2017:

a. Issue of 20,000 shares of ordinary at P50 per share on January 20.
b. Purchase of 5,000 of the company’s own ordinary shares from stockholders at P60 per share on
February 20.
c. A 2 for 1 share split on the ordinary on April 1.
d. 20% stock dividend top ordinary shares was declared on April 30 and distributed on May 20. The
prevailing fair value of share on this date was P60 per share.
e. Reissuance of 3,000 reacquired shares at P40 per share on May 3.
f. Donation of 15,000 shares of ordinary by shareholders on June 5.
g. Reissuance of 10,000 donated stocks at P40 per share on July 1.
h. Declaration of P12 cash dividends to preference shares and P3 per share dividends to ordinary on
November 30 to stockholders as of December 20 payable on January 30 of the next year.
i. Total comprehensive income for the year is P1,200,000.

_____ 1. What is the adjusted balance of the Ordinary share account on December 31, 2017?
a. P 4,150,000 c. P 7,700,000
b. P 3,850,000 d. P 8,300,000

_____ 2. What is the total Additional paid-in capital as of December 31, 2017?
a. P 2,630,000 c. P 2,690,000
b. P 2,660,000 d. P 8,300,000

_____ 3. What is the total Contributed capital as of December 31, 2017?

a. P 6,780,000 c. P 8,780,000
b. P 7,280,000 d. P 9,280,000

_____ 4. What is the balance of the Accumulated profits on December 31, 2017?
a. P 4,028,000 c. P 3,054,000
b. P 3,818,000 d. None of the choices

_____ 5. What is the total shareholder’s equity as of December 31, 2017?

a. P 10,458,000 c. P 10,868,000
b. P 11,098,000 d, P 11,318,000

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PROBLEM 2
During the current year, Rodelyn Company issued 10,000 ordinary shares with P100 par value and 20,000
convertible preference shares with P200 par value for P8,000,000. On the date of issuance, the ordinary share
is selling at P360 and the preference share is selling at P270. The entity also issued 6% bonds with a maturity
value of P6,000,000, together with 20,000 ordinary shares with P100 par value for a combined cash amount
of P11,000,000. The market value of the ordinary share is cannot be determined. If the bonds were issued
separately, the bonds would have been sold for P5,000,000 on an 8% yield to maturity basis.

_____ 6. What amount should be reported as share premium from preference shares?
a. P 4,000,000 c. P 800,000
b. P 6,000,000 d. P 0

_____ 7. What amount should be reported as share premium from ordinary shares?
a. P 4,000,000 c. P 2,200,000
b. P 6,600,000 d. P 6,200,000

PROBLEM 3
Ezra company reported the following equity at the beginning of the current year:
Share capital, P10 par P 5,000,000
Share premium 2,000,000
Retained earnings 1,500,000

During the current year, the entity had the following share transactions:
 Acquired 20,000 treasury shares for P1,000,000.
 Sold 15,000 treasury shares at P60 per share.
 Sold the remaining treasury shares at P45.

_____ 8. What amount should be reported as share premium at year-end?

a. P 2,125,000 c. P 2,000,000
b. P 2,150,000 d. P 1,975,000

PROBLEM 4
Princesa Company had issued 100,000 ordinary shares. Of these, 5,000 shares were held as treasury on
January 1, 2016. During the current year, transactions involving ordinary shares were as follows:
May 1 1,000 shares of treasury were sold.
Aug 1 10,000 previously unissued shares were sold.
Nov 1 A 2-for-1 share split took effect.

_____ 9. On December 31, 2016, how many ordinary shares were issued?
a. 220,000 c. 222,000
b. 218,000 d. 210,000

_____ 10. On December 31, 2016, how many ordinary shares were outstanding?
a. 212,000 c. 214,000
b. 216,000 d. 218,000

PROBLEM 5
On December 31, 2016, Noreen Company canceled 5,000 shares of P50 par value held in treasury at an
average cost of P120 per share. Before recording the cancelation of the treasury shares, the entity had the
following shareholders’ equity:

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 Share capital, 50,000 shares originally issued at P75 P 2,500,000
Share premium 1,250,000
Retained earnings 1,000,000
Treasury shares, at cost 600,000

_____ 11. On December 31, 2016, what amount should be reported as share capital outstanding?
a. P 2,500,000 c. P 2,250,000
b. P 1,900,000 d. P 2,125,000

PROBLEM 6
Leizel Company was organized on January 1, 2016. On that date, the entity issued 200,000 shares with P10
par value at P15 per share. During the period January 1, 2016 through December 31, 2017, the entity reported
net income of P2,000,000 and paid cash dividends of P500,000. On January 5, 2017, the entity purchased
10,000 shares at P20 per share to be held as treasury. On December 31, 2017. 5,000 treasury shares were sold
at P30 per share and the remaining shares were retired.

_____ 12. What is the total shareholders’ equity on December 31, 2017?
a. P 4,450,000 c. P 4,400,000
b. P 4,350,000 d. P 4,950,000

PROBLEM 7
Sharon Company was organized on January 1, 2016 with 100,000 authorized shares of P100 par value.
During 2016, the following transactions occurred:
Jan 1 Sold 30,000 shares at P150 per share.
Feb 1 Issued 2,000 shares for legal services with a fair value of P250,000. The shares on this date is
quoted at P140 per share.
Mar 1 Purchased 5,000 treasury shares at cost of P120 per share.
Oct 1 Issued P5,000,000 convertible bonds at P120. The bonds are quoted at 98 without the
conversion feature.
Nov 1 Declared a 2-for-1 share split when the market value of the share was P160.
Dec 1 Sold 10,000 shares at P75 per share.
Dec 31 The net income for the year was P2,000,000.

_____ 13. What amount should be reported as share capital on December 31, 2016?
a. P 3,000,000 c. P 3,700,000
b. P 3,200,000 d. P 4,800,000

_____ 14. What amount should be recognized as share premium on December 31, 2016?
a. P 1,800,000 c. P 2,930,000
b. P 2,900,000 d. P 2,650,000

_____ 15. What is the total shareholders’ equity on December 31, 2016?
a. P 8,000,000 c. P 6,000,000
b. P 6,900,000 d. P 8,030,000

NAME: SCORE:
COURSE YEAR-SECTION: BSA 3-1t
13. 4. 10. 1. 7.
8. 14. 5. 11. 2.
3. 9. 15. 6. 12.

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