Dr. FE R.

OCHOTORENA CFAS Midterm Examination- 2nd Semester, SY 2019-2020

ANSWER SHEET 20B

ANALOGY(2 points each)
1 Cumulative Preference Share Capital 6 Retained Earnings
2 Does not decrease 7 Does not affect, decreases
3 Outstanding shares 8 Does not decrease
4 Discretionary Appropriation 9 Declaration
5 Outstanding Shares 10 Treasury Shares, RFHB

II.STRAIGHT PROBLEM. (2points each) NO SOLUTION, NO POINT.

ANSWER BRIEF SOLUTION
1 P150, 000 10, 000 Shares x P15 = P150, 000
2 P45, 000 50, 000 Shares – 5,000 Shares = 45, 000 Shrs x P1 = P45,
000
3 P5,600 [40, 000 shrs x 2% x 7 (P4-P11)]
4 P1 330 000 [P1,200,000+(6000sh x P16) + (2,000 x P17)]

5 P64, 000 8, 000 shrs x P8 = P64, 000

6 P702,000 [(40,000 x P12) - (6,000 x P13) + 300,000]
7 P6 PAR value share 500, 000 Shares
500, 000 shares outstanding (200, 000 Shrs x 5 / 2)
= P6 (P15 x 2 / 5)
8 P 110 SHE P2,300,000
Less: Preference Share 10% P500,000
Preference Share 12% 600,000
Dividend in arrears 100000 1,200,000
Equity identified with ordinary shares P1,100,000

Book value per share

Ordinary (P1,078,000 / 10,000sh ) P110.00

9 GAIN 8000 PSC P40 000

PSP 12000
CASH. P44 000
RE 8 000

1 P51 000, DECREASES RE= 30 000 sh x 10% xP27 = P81 000

0 1P = P10 x 10%
= 81, 000 – P30, 000
1 P100 100 sh x P10 x 10%
1
1 P150 Fair market value
2
1 20 Market value on the day of declaration
3
1 P105,000 9,000sh x 10% x 10 = P9,000
4 Retained Earnings = P146,000 – P32,000 – P9,000
1 Preference Share – P4.5 Dividends Preference Ordinary
5 Ordinary Share – P1.25 P60,000
5% of P100,000 (15,000) P15,000
5% of P300,000 (15,000) P15,000
Balance P30,000 P15,000 P15,000
(30,000x100,000/400,000) 7,500 22,500
(30,000x300,000/400,000) P22,500 P37,500
P60,000
P4.5 P1.25

1 Preference Share – P3 Preference Ordinary

6 Ordinary Share – P1.5 Dividend in arrears P15,000
The remainder to ordinary P45,000
Total P15,000 P45,000

1
Dr. FE R. OCHOTORENA CFAS Midterm Examination- 2nd Semester, SY 2019-2020

P60,000
P3 P1.5
1 Preference Share – P1 Preference Ordinary
7 Ordinary Share – P1.83 5% of P100,000 P5,000
The remainder to ordinary P55,000
Total P5,000 P55,000
P60,000
P1 P1.83
1 P25.4 P400, 000 (20, 000 shrs x P20)
8 P40, 000. (20, 000 shrs x P20)
P68,000. ( profit)
= P508, 000 / 20, 000 shrs = P25.4
1 P44.35 P4, 443, 500 / 100, 000
9
2 P13.09 P1, 964, 200 / 100,000 + 20,000 + 30,000
0
2 P-0.82 P98,210 / 120,000
1
2 P304,700 (P261,000 + 116,000 – P48,000 - P24,300)
2
2 48,000sh {[120,000 x (4/10)] / P10}
3
2 Ordinary Share Capital Ordinary Share Capital = P2,500,000 + P1,200,000
4 = P3,700,00 Issued = (P2,500,000 / P10) – 250,000sh
Issued (1,200,000 / P10) – 120,000sh
= 370,000sh = 250,000sh + 120,000sh
2 P1.34 [(P453, 210 – 50, 000 PS) / 300, 000 OS)]
5
2 P300,000 50, 000 shrs / 5 x 1 = 10, 000 Shrs
6 10, 000 shrs x P30 = P300, 000
2 P1, 450, 000 P1,450, 000 Fair Market Value
7
2 650,000 It remains the same
8
2 P700,000 P1,200,000 – P500,000
9
3 It decreases RE by P8, 000 10% x 10, 000 Shrs x P8
0
3 30 Sh 300 x 10%
1
3 P76, 000 (5, 000 Shrs x P15.2)
2
3 600 (6, 000 Shrs / 10)
3
3 P12.4 P62,000 / 5000
4
3 B Cash Dividends = (400,000+450,000+500,000+550,000)
5 = P1,900,000
Retained Earnings P150,000
OS Dividends Distributable P75,000
PIC 75,000
(300,000sh x 5% x 20)
(300,000sh x 5% x 10)
(300,000sh x 5% x 10)