Answers - Chapter 3 Vol 2 2009

Chapter 3 – Shareholders’ Equity
CHAPTER 3
SHAREHOLDERS’ EQUITY
PROBLEMS
3-1. (Budomo Company)

 Cash (20,000 x 300) 6,000,000
Ordinary Share 6,000,000
 Legal Expense/Professional Fees 90,000
Ordinary Share (250 x 300) 75,000

Share Premium - Ordinary 15,000
 Land 1,000,000
Building 2,950,000
Ordinary Share (12,500 x 300) 3,750,000
 Cash (6,500 x 380) 2,470,000
Ordinary Share (6,500 x 300) 1,950,000

3-2.
a. Cash (10,000 x 200) 2,000,000
Ordinary Share (10,000 x 150) 1,500,000
Share Premium-Ordinary 60,000

Cash 60,000
b. Land (3,500 x 560) 1,960,000

Ordinary Share (3,500 x 200) 700,000
Share Premium – Ordinary 1,260,000
c. Cash 18,000,000
Preference Share 2,500,000
Share Premium – Preference 2,000,000
MV: Pref – 5,000 x 800=4M
Ord – 100,000 x 120 = 12M
Allocation:
Pref: 18M x 4/16 = 4.5M
Ord: 18M x 12/16 = 13.5M
22
d. Subscription Receivable 450,000

Cash 150,000
Subscribed Ordinary Share 500,000
Share Premium – Ordinary 100,000
e. Land 5,000,000
Cash 40,000
Donated Capital 4,960,000
3-3. (Blazing Red Corporation)
Shareholders’ Equity
Contributed Capital
10% Preference Share, cumulative and non-participating, P100 par
30,000 shares authorized; 12,000 shares issued and outstanding P1,200,000
Ordinary Share, P10 par, 100,000 shares authorized, 30,000 shares
issued, 29,000 shares outstanding 300,000
Subscribed Ordinary Share, 4,500 shares 45,000
Subscription Receivable – Ordinary (43,200)
Share Premium – Preference 275,000
Share Premium –Ordinary 77,000
Total contributed capital P1,853,800
Retained Earnings
Appropriated for Treasury Share P 15,000
Unappropriated 195,000 210,000
Treasury Shares, 1,000 ordinary shares, at cost ( 15,000)
Total Shareholders’ Equity P2,048,800
The total amount of P2,048,800 may also be obtained without necessary preparing
the shareholders’ equity in good format (if not required) as follows:
Issue of 30,000 ordinary shares P 350,000

Issue of preference shares in exchange of equipment 1,475,000
Subscriptions for 4,500 ordinary shares at 16 72,000
Subscriptions receivable (60%) (43,200)
Purchase of 1,000 treasury shares at 15 (15,000)
Retained earnings 210,000
Total shareholders’ equity, December 31, 2009 P 2,048,800
3-4. (Millennium Company)

(a)
(1) Treasury Share 140,000
Cash 140,000
(2) Cash 60,000

Treasury Share 56,000
Paid in Capital from Treasury Share 4,000
(3) Cash 65,000

Paid in Capital from Treasury Share 4,000
Retained Earnings 1,000
(4) Ordinary Share 10,000

Share Premium 3,000
23
(b) Total shareholders’ equity, December 31, 2008 P2,200,000

(1) Purchase of treasury share (10,000 x 14) (140,000)
(2) Sale of treasury share (4,000 x 15) 60,000
(3) Sale of treasury share (5,000 x 13) 65,000
Net income for the year 180,000
Dividends declared (200,000)
Total shareholders’ equity, December 31, 2009 P2,165,000
The total shareholders’ equity may also be obtained by determining the balance of
the shareholders’ equity accounts, as follows:
Ordinary Share, P10 par (99,000 shares issued and outstanding)P 990,000
Share Premium 297,000
Total shareholders’ equity P2,165,000
3-5. (Consuelo Enterprises, Inc.)

(a) Preference Share (4,000 x 20) 80,000
Share Premium – Preference (4,000 x 1.60) 6,400
Cash (4,000 x 22) 88,000
(b) Preference Share (4,000 x 20) 80,000

Cash (4,000 x 26) 104,000
(c) Preference Share (4,000 x 20) 80,000

Cash (4,000 x 20.50) 82,000
PIC from Retirement of Preference 4,400
Average preference share premium per share

160,000 / 100,000 shares = 1.60
3-6. (Concepcion Enterprises, Inc.)

(a) Preference Share (3,000 x 20) 60,000
Ordinary Share (3,000 x 30) 90,000
(b) Preference Share (3,000 x 20) 60,000

Ordinary Share (1,500 x 30) 45,000
PIC from Conversion of Preference 19,800
3-7. (Red Heart Corporation)

06/15/09 Cash 6,000,000
09/30/09 Retained Earnings (80,000 x 5% x 110) 440,000
24
Share Dividends Distributable (4,000 x 400,000

100)
11/10/09 Share Dividends Distributable 400,000

Ordinary Share 400,000
12/31/09 Income Summary 1,175,000

Retained Earnings 1,175,000
03/31/10 Treasury Share (3,000 x 95) 285,000

Cash 285,000
05/01/10 Cash (1,500 x 120) 180,000
Treasury Share (1,500 x 95) 142,500
PIC from Treasury Share 37,500
08/10/10 Issued 82,500 rights to shareholders

entitling holders to purchase 2 additional
shares for P125 per share.
09/15/10 Cash (30,000 x 125) 3,750,000

Ordinary Share (30,000 x 100) 3,000,000
10/31/10 Cash (80,000 x 125) 10,000,000

Ordinary Share (80,000 x 100) 8,000,000
12/10/10 Retained Earnings 962,500

Dividends Payable (192,500 x 5) 962,500
**12/20/10 Ordinary Share (1,000 x 100) 100,000

Share Premium – Ordinary (1,000 x 10)* 10,000
*Share premium per share
300,000/30,000 = 10
12/31/10 Income Summary 1,200,000

3-8. (Red Carpet Company)

(a) Total lump sum price is P147,000 (1,500 x 98), allocated as follows:
Securities Market value Allocation Allocated Price

Preference 90 147,000 x 90/100 132,300
Warrant 10 147,000 x 10/100 14,700
Entry Cash 147,000
Preference Share (1,500 x 30) 45,000
Share Premium – Preference 87,300
Share Warrants Outstanding 14,700
(b) Cash (600 x 40) 24,000
25
Share Warrants Outstanding 11,760

3-9. (Red Hot Company)

(a) Value of each option P8
Number of shares granted x 30,000
Total value assigned to share options P240,000
Required service period  3years
Annual compensation expense P 80,000
(b) Share Options Outstanding 240,000
Cash (30,000 x 50) 1,500,000
Ordinary Share (30,000 x 20) 600,000
Share Premium - Ordinary 1,140,000
3-10. (Fire Red Company)

01/02/09 Memo: granted 40,000 share options were granted to certain officers
for the purchase of the company’s P100 par ordinary shares at P430
per share.
12/31/09 Compensation Expense 800,000
Share Options Outstanding 800,000
(40,000 x 80)  4 years
01/01/11 Memo: 8,000 share options were cancelled.

Total accrued compensation expense
(32,000 x 80)=2,560,000
x 3/4 1,920,000
Less: previously accrued 1,600,000
Compensation expense-2011 320,000
(32,000 x 80) / 4
06/30/13 Cash (32,000 x 430) 13,760,000

Share Options Outstanding (32,000 x 80) 2,560,000
Ordinary Shares (32,000 x 100) 3,200,000
3-11. (Red Fox Corporation)

(a)
2009 200 – 10 – 15 = 175 employees x 100 options=17,500
17,500 x 32 = 560,000; 560,000 x 1/3 186,667
2010 200–10–12–5=173 employees x 100 options=17,300

17,300 x 32 x 2/3 = 369,067; 369,067 – 186,667 182,400
26
2011 200-10-12-8=170 employees x 100 options=17,000

17,000 x 32 = 544,000; 544,000 – 369,067 174,933
(b)
01/01/09 Granted 100 share options to each of its 200 employees to buy
P100 par ordinary share at P220 per share. The options are
exercisable starting January 1, 2010 provided that the employees
are still in the service. Options expire on December 31, 2011.


2012 Cash (140 x 100 x 220) 3,080,000

Share Options Outstanding (14,000 x 32) 448,000
Ordinary Share (14,000 x 200) 2,8000,000
2013 Cash (10 x 100 x 220) 220,000

Share Options Outstanding (1,000 x 32) 32,000
Ordinary share (1,000 x 200 200,000
Share Premium - ordinary 52,000
Share option outstanding (20 x 100 x 32) 64,000

Paid in capital from Forfeited share
options 64,000
3-12. (Cherry Company)

(a)
01/01/09 Memo: Granted 10,000 share options for the purchase of P100 par
ordinary shares at P120 per share. The options vest once the market
price of ordinary shares reached P200. Options expire at the end of
2012.

(10,000 x 20) / 3 years

(10,000 x 20) - 66,667
2011 Cash (10,000 x 120) 1,200,000

Ordinary Shares (10,000 x 100) 1,000,000
(b)
01/01/09 Memo: Granted 10,000 share options for the purchase of P100 par
27
ordinary shares at P120 per share. The options vest once the market
price of ordinary shares reached P200. Options expire at the end of
2010.

(10,000 x 20) / 3 years


2012 Cash (8,000 x 120) 960,000

Share Options Outstanding (80% x 200,000) 160,000
Ordinary Shares (8,000 x 100) 800,000
Share Options Outstanding (20% x 200,000) 40,000

PIC from Forfeited Share Options 40,000
(c) If the stock price reached P200 by June 2012, the same entries will be made
for year 2009 through 2011, as given in (b) The recorded share options,
however, will be cancelled at the end of 2012, as the options already expire.
12/31/12 Share Options Outstanding 200,000
PIC from Forfeited Share Options 200,000
3-13. (Panda Company)

(a)
01/01/09 Granted 80 share options to each of 400 employees for the
purchase of P100 par ordinary shares at P140 per share.

400 x 80 x 22 = 704,000
704,000/2 = 352,000

2011 Cash (32,000 x 140) 4,480,000

Ordinary Share (32,000 x 100) 3,200,000
(b) The full amount of P704,000 is recognized as

compensation expense since the options vests
already in 2007.
3-14. (Paul Company)

(a)
01/01/09 Memo: Issued to its CEO share options for the purchase of ordinary shares at
a strike price of P50. The options are exercisable beginning January 1, 2012
28
and expire on December 31, 2013. The number of share options will be based
on the level of sales for 2011.

10,000 sh x 30 x 1/3

15,000 sh x 30 x 2/3 300,000
Less: previously accrued 100,000
Compensation expense 200,000

18,000 sh x 30 x 3/3 540,000
Less: previously accrued 300,000
Compensation expense 240,000
(b) Assuming that the chief executive officer resigned in 2010.
Compensation Expense 100,000
Note: When the grant of share options is based on non-market performance
condition, the amount of recognized services received during the vesting period shall
be based on the number of share options expected to vest. The entity shall reverse
that estimate, if necessary, if the share options are later forfeited, or lapse at the end
of the share option’s life. Thus, in effect, on a cumulative basis, no compensation
expense is recorded as a result of the stock options.
3-15. (Joey Corporation)

(a)
Share Appreciation Rights Payable 66,667
10,000 x (140 -120) x 1/3

10,000 x (150 - 120) x 2/3 = 200,000
200,000 – 66,667 = 133,333

10,000 x (165 - 120) = 450,000
450,000 –200,000 = 250,000
(b) (1) Assuming that the rights were exercised on January 1, 2012, when the market
price is P165.
01/01/12 Share Appreciation Rights Payable 450,000
Cash 450,000
29
(b) (2) Assuming that the rights were exercised on December 31, 2012, when the
market price is P172.
12/31/12 Share Appreciation Rights Payable 450,000
Cash 10,000 x (172-120) 520,000
3-16. (Red Bull Corporation)

10,000 x 26.80 x 1/3

10,000 x 31.20 x 2/3 = 208,000
208,000 – 83,333 = 118,667

10,000 x 39.40 = 394,000
394,000 –200,000 = 194,000
2012 Share Appreciation Rights Payable 394,000

Cash 10,000 x (165-120) 450,000
3-17. (Emerald Company)

(a) Fair value of the equity alternative
4,000 shares x 150 600,000
Fair value of debt component
3,600 shares x 158 568,800
Fair value of equity component 31,200
(b) 2009: 3,600 x 160=576,000/3 192,000

31,200/3 10,400
Total compensation expense 202,400
2010: 3,600 x 165 x 2/3 = 396,000

396,000 – 192,000 204,000
31,200/3 10,400
2011: 3,600 x 168 = 604,800

604,800 – 396,000 208,800
31,200/3 10,400
2012: 2,700 x (172-165) 18,900
(c)
01/01/09 Granted each of the four executives the right to choose either
1,000 ordinary shares or to receive cash payment equal to 900
shares, conditional upon the completion of three years of service.
30




Cash 151,200
PIC from Unexercised Share Options 7,800
31,200 / 4 = 7,800
604,800 / 4 =151,200

Ordinary Share (3,000 x 100) 300,000
7,800 x 3 = 23,400
151,200 x 3 = 453,600 + 18,900
3-18. (Red Stone Company)

(a) Retained Earnings ( 10,000 shares x P20) 200,000
Share Dividends Distributable 100,000
Share Premium 100,000

Ordinary Shares 100,000
(b) Retained Earnings (30,000 x 10) 300,000


(c) Memo: Effected a 2 for 1 stock split on 100,000 shares P100 par
previously issued and outstanding.
3-19. (Buenviaje Corporation)

Capital structure:
Preference Ordinary
Number of shares outstanding 20,000 250,000
Total par value P2,000,000 P2,500,000
(a) Preference share is non-cumulative and non-participating

2009 Preference Ordinary
Current preference dividends (9% x 2,000,000) P 180,000
Excess (1,500,000 – 180,000) P1,320,000
31
Dividend per share P9.00 P5.28

Excess (2,400,000 – 180,000) P2,220,000

Excess (5,600,000 – 180,000) P5,420,000
(b) Preference share is cumulative and non-participating.

Dividends in arrears (9% x 2,000,000 x 3) P 540,000
Excess (1,500,000 – 540,000) P 960,000
Excess (2,400,000 – 180,000) P2,220,000

Excess (5,600,000 – 180,000) P5,420,000
(c) Preference share is cumulative and fully participating

Current dividends:
9% x 2,000,000 P 180,000
9% x 2,500,000 P 225,000
Excess:
1,095,000 x 2.0/4.5 486,667
1,095,000 x 2.5/4.5 608,333
Total dividends P 666,667 P 833,333

Current dividends:
9% x 2,000,000 P 180,000
9% x 2,500,000 P 225,000
Excess:
1,995,000 x 2.0/4.5 886,667
1,995,000 x 2.5/4.5 1,108,333
Total dividends P1,066,667 P1,333,333
Dividend per share P53.33 P 5.33

Current dividends:
9% x 2,000,000 P 180,000
9% x 2,500,000 P 225,000
Excess:
32
5,195,000 x 2.0/4.5 2,308,889

5,195,000 x 2.5/4.5 2,886,111
Total P2,488,889 3,111,111
Dividend per share P124.44 P 12.44
3-20. (Mama Mia Company)

50% x 100,000 x 10 = 500,000
Fractional Share Warrants Outstanding 100,000
Fractional Share Warrants Outstanding 100,000
PIC from Unexercised Fractional Share Warrants 20,000
3.21. (Kenneth Corporation)

October 31, 2009
Trading Securities 10,000
Unrealized Gain on Trading Securities 10,000
10,000 shares x (15 – 14)

Property Dividends Payable 150,000
10,000 shares x 15
December 31, 2009

Unrealized Gain on Trading Securities 20,000
10,000 shares x (17 – 15)

February 28, 2010


Gain on Disposal of Trading Securities 30,000
3-22. (Buenas Aires Corporation)

Preference Ordinary Treasury Share
Shares Shar
Total SHE Issued es Shares Cost
Issu
ed
12/31/08Balances P16,500,000 30,000 100,000
2009 transactions:
a) 4,000 x 280 (1,120,000) (4,000)
b) 8,000 x 75 (600,000) 8,000 P600,000
c) 2:1 share split 100,000 8,000
d) 6,000 x 45 270,000 (6,000) (225,000)*
33
e) 4,000 x 46 4,000
f) 2,000 x 48 96,000 (2,000)
g) Net income 2,000,000
12/31/09 balances P7,146,000 26,000 200,000 12,000 P375,000
*P600,000 x 6,000/16,000 = 225,000
(a) Total shareholders’ equity P17,146,000

(b) Number of preference shares issued and outstanding 26,000
(c) Number of ordinary shares issued 200,000
Number of ordinary shares outstanding(200,000 – 12,000) 188,000
(d) Cost of remaining treasury shares P 375,000
3-23. (La Vida Company)

Retained earnings balance as of December 31, 2009
3,900,000 – 600,000 – 240,000 P 3,060,000
Total shareholders’ equity as of December 31, 2009
6,000,000 + 8,000,000 + 3,060,000 P17,060,000
(a) Preference Ordinary
Par value of preference share P6,000,000
Dividends in arrears (6,000,000 x 9% x 3 yrs.) 1,620,000
Excess to ordinary (17,060,000 – 7,620,000) P9,440,000
Total equity P7,620,000 P9,440,000
Divide by the number of shares outstanding 60,000 800,000
Book value per share P 127 P 11.80
(b) Preference Ordinary

Liquidation value (60,000 shares x P105) P6,300,000
Dividends in arrears (P6,000,000 x 9% x 3 yrs.) 1,620,000
Excess to ordinary (17,060,000 – 7,920,000) P9,140,000
Total equity P7,920,000 P9,140,000
Divide by the number of shares outstanding 60,000 800,000
Book value per share P132 P11.425
3-24. (Los Angeles Company)

(a) Retained Earnings 400,000
Accumulated Depreciation 75,000
Current Assets 100,000
Building 375,000

Share Premium 2,000,000
Share Premium 1,400,000
(b) Current Assets P 400,000 Liabilities P1,000,000

Land 1,500,000 Ordinary Share 4,000,000
Building 4,625,000 Share Premium 600,000
Accumulated Depreciation ( 925,000)
Total Assets P5,600,000 Total Equities P5,600,000
3-25. (Las Vegas, Inc.)
34

Inventory 300,000
Land 1,500,000
Buildings 1,875,000
Machinery and Equipment 350,000
Accum. Depreciation – Buildings 875,000
Accum. Depreciation – Machinery & Equipment 150,000
Revaluation Surplus 3,700,000
Revaluation Surplus 2,300,000

MULTIPLE CHOICE PROBLEMS

Theory
MC1 C MC12 A
MC2 D MC13 C
MC3 B MC14 C
MC4 B MC15 A
MC5 B MC16 D
MC6 C MC17 B
MC7 C MC18 D
MC8 C MC19 C
MC9 A MC20 D
MC10 C MC21 C
MC11 C MC22 C
Problems
MC23 C 230,000 + 525,000 + 5,000 = 760,000
MC24 B 480,000 x 110/120 = 440,000; 440,000-400,000 = 40,000
MC25 D
MC26 D (60,000 x 2) – (5,000 x 2) = 110,000
MC27 D 125,000 x 3 = 375,000
MC28 A 375,000 – [(12,000 x 3) + 5,000] = 334,000
MC29 A 20,000 x 9 = 180,000; 180,000/2 = 90,000 x 1/2 = 45,000
MC30 C 600,000 x 5 = 3,000,000
MC31 B 1,000,000 + (10,000 x 20) – (2,000 x 20) = 1,160,000
MC32 A 7,000,000 + (35,000 x 70) = 9,450,000
MC33 B 2,000 x 8 = 16,000
MC34 C 70 – (70/2) = 35
MC35 B (5,000 x 80) – (5,000 x 40) = 200,000
MC36 B 600 x 10 x 60% = 3,600; 6,000 – 3600 = 2,400
MC37 D Interest expense for 2009 = 100,000 x 10% x 9/12 = 7,500
MC38 C 2,120,000 – (2,000 bonds x 1,040) = 40,000
MC39 B 945,000/ 70 = 13,500; 13,500/90,000 = 15%
MC40 D 80,000 + (2,000,000 x 8%) = 240,000; 300,000 – 240,000 = 60,000
MC41 D (3,000,000 x 5% x 2 years) – 100,000 = 200,000 arrears, end
MC42 B (110,000 + 10,000) x 2 = 220,000 issued; 220,000 – (4,000 x 2) = 212,000
35
MC43 A 24,000+48,000=72,000; 108,000-72,000-24,000 = 12,000

72,000 + (12,000 x 4/6) = 80,000; 24,000 + (12,000 x 2/6) =28,000
80,000/4,000 = 20; 28,000/20,000 = 1.40
MC44 A 8,000,000 – (10,000 x 70) – 1,200,000 = 6,100,000
MC45 A (15 x 2)/5 = 6.00
MC46 B 25,000 x 40 = 1,000,000; 10% x 2,500,000 = 150,000
1,000,000 + 250,000 = 1,250,000
MC47 C (40,000x 105) – (600 x 110) + (400 x 95) + 830,000 – 200,000 = 4,802,000
MC48 C 5,520,000 – 25,000 – 170,000 + 40,000 + 900,000 = 6,265,000
MC49 D (2,000 x 85) – (800 x 42.50) = 136,000
MC50 A [3,000 x (30-20)] / 3 years = 10,000
MC51 C 4,500,000 x 95% = 4,275,000; 4,275,000/3 = 1,425,000
MC52 B 4,500,000 x 94% x 2/3 = 2,820,000; 2,820,000 – 1,425,000=1,395,000
MC53 B (4 x 200 x 300) x ½ = 120,000
MC54 D (90% x 7 x 200 x 300) – 120,000 = 258,000
MC55 B 360,000 – 70,000 = 290,000; 290,000/5,000 = 58
MC56 B 3,150,000/ 50,000 = 63
MC57 B 3,150,000 – (5,000 x 120) = 2,550,000; 2,550,000/50,000 = 51
MC58 B RE = 1,000,000; cumulative dividends in arrears = 5,000,000 x 8% x 3
years = 1,200,000, but dividends are limited to the extent of RE balance of
P1,000,000; Thus, equity of ordinary share is 13,500,000 – 5,000,000 –
1,000,000 = 7,500,000; 7,500,000/ 750,000 shares = P10
MC59 C 13,500,000 – (50,000 x 106) – 1,000,000 = 7,200,000 ; 7,200,000/750,000
shares = 9.60
MC60 D (200,000 x 2) + (200,000 x 5) – 950,000 = 450,000
36

Answers - Chapter 3 Vol 2 2009

Caricato da

Informazioni sul documento

Copyright

Formati disponibili

Condividi questo documento

Condividi o incorpora il documento

Opzioni di condivisione

Hai trovato utile questo documento?

Questo contenuto è inappropriato?

Copyright:

Formati disponibili

Answers - Chapter 3 Vol 2 2009

Caricato da

Copyright:

Formati disponibili

Chapter 3 – Shareholders’ Equity

3-1. (Budomo Company)

Ordinary Share 6,000,000

 Legal Expense/Professional Fees 90,000

Ordinary Share (250 x 300) 75,000

 Cash (6,500 x 380) 2,470,000

Ordinary Share (6,500 x 300) 1,950,000

Share Premium-Ordinary 60,000

b. Land (3,500 x 560) 1,960,000

d. Subscription Receivable 450,000

Issue of 30,000 ordinary shares P 350,000

3-4. (Millennium Company)

(2) Cash 60,000

(3) Cash 65,000

(4) Ordinary Share 10,000

Treasury Share 14,000

(b) Total shareholders’ equity, December 31, 2008 P2,200,000

3-5. (Consuelo Enterprises, Inc.)

(b) Preference Share (4,000 x 20) 80,000

(c) Preference Share (4,000 x 20) 80,000

Average preference share premium per share

3-6. (Concepcion Enterprises, Inc.)

(b) Preference Share (3,000 x 20) 60,000

3-7. (Red Heart Corporation)

09/30/09 Retained Earnings (80,000 x 5% x 110) 440,000

Share Dividends Distributable (4,000 x 400,000

11/10/09 Share Dividends Distributable 400,000

12/31/09 Income Summary 1,175,000

03/31/10 Treasury Share (3,000 x 95) 285,000

08/10/10 Issued 82,500 rights to shareholders

09/15/10 Cash (30,000 x 125) 3,750,000

10/31/10 Cash (80,000 x 125) 10,000,000

12/10/10 Retained Earnings 962,500

**12/20/10 Ordinary Share (1,000 x 100) 100,000

12/31/10 Income Summary 1,200,000

3-8. (Red Carpet Company)

Securities Market value Allocation Allocated Price

(b) Cash (600 x 40) 24,000

Share Warrants Outstanding 11,760

3-9. (Red Hot Company)

3-10. (Fire Red Company)

01/01/11 Memo: 8,000 share options were cancelled.

06/30/13 Cash (32,000 x 430) 13,760,000

3-11. (Red Fox Corporation)

2010 200–10–12–5=173 employees x 100 options=17,300

2011 200-10-12-8=170 employees x 100 options=17,000

12/31/09 Compensation Expense 186,667

12/31/11 Compensation Expense 174,933

2012 Cash (140 x 100 x 220) 3,080,000

2013 Cash (10 x 100 x 220) 220,000

Share option outstanding (20 x 100 x 32) 64,000

3-12. (Cherry Company)

12/31/09 Compensation Expense 66,667

12/31/10 Compensation Expense 133,333

2011 Cash (10,000 x 120) 1,200,000

12/31/09 Compensation Expense 66,667

12/31/10 Compensation Expense 66,667

12/31/11 Compensation Expense 66,666

2012 Cash (8,000 x 120) 960,000

Share Options Outstanding (20% x 200,000) 40,000

3-13. (Panda Company)

12/31/09 Compensation Expense 352,000

12/31/10 Compensation Expense 352,000

2011 Cash (32,000 x 140) 4,480,000