ASSIGNMENT #3
PROBLEMS (Provide a solution for every question)
Mara Company provided the following data at year-end:
Authorized share capital
Unissued share capital
Subscribed share capital
Subscription Receivable
Share Premium
Retained earnings unappropriated
Retained earnings appropriated
Revaluation surplus
Treasury shares, at cost
5,000,000
2,000,000
1,000,000
400,000
500,000
600,000
300,000
200,000
100,000
1. What total amount should be reported as shareholders’ equity?
Authorized share capital
5,000,000
Unissued share capital
( 2,000,000)
Subscribed share capital
1,000,000
Subscription Receivable
(400,000)
Share Premium
500,000
Retained earnings unappropriated
600,000
Retained earnings appropriated
300,000
Revaluation surplus
200,000
Treasury shares, at cost
(100,000)
Total shareholders’ equity
P5,100,000
Glenn Company provided the following information at year-end:
Preference share capital, P100 par
2,300,000
Share Premium – preference share
805,000
Ordinary share capital, P100 par
5,250,000
Share Premium – ordinary share
2,750,000
Subscribed ordinary share capital
50,000
Retained earnings
1,900,000
Note payable
4,000,000
Subscription receivable – ordinary share 400,000
2. What is the amount of legal capital?
Preference share capital, P100 par
Ordinary share capital, P100 par
Subscribed ordinary share capital
AMOUNT OF LEGAL CAPITAL
2,300,000
5,250,000
50,000
P7,600,000
Munn Company reported the following equity accounts:
Preference share capital, par value P15
Share Premium – preference share
Ordinary share capital, no par, P50 stated value
2,550,000
150,000
3,000,000
3. What is the number of issued and outstanding shares for each class?
Preference share (2,550,000/par value P15) = 170.000
Ordinary share (3,000,000/P50) = 60,000
East Company issued 1,000 shares with P5 par to Howe as compensation for 1,000 hours of legal services
performed. Howe usually bills P160 per hour for legal services. On that date of issuance, the share was
trading on a public exchange at P140.
4. By what amount should the share premium account increase as a result of the transaction?
1,000 shares issued x P 140 = P 140,000
1,000 shares x P5 par value =
5,000
share premium account increase
P 135, 000
Kalinga Company reported the following adjusted account balances at year-end:
Share capital
Share premium
Treasury share, at cost
Actuarial loss on defined benefit plan
Retained earnings unappropriated
Retained earnings appropriated
Revaluation surplus
15,000,000
5,000,000
2,000,000
1,000,000
6,000,000
3,000,000
4,000,000
Cumulative translation adjustment – credit
1,500,000
5. What amount should be reported as shareholder’s equity at year-end?
Share capital
Share premium
Treasury share, at cost
Actuarial loss on defined benefit plan
Retained earnings unappropriated
Retained earnings appropriated
Revaluation surplus
Cumulative translation adjustment – credit
Shareholder’s equity at year-end
15,000,000
5,000,000
(2,000,000)
(1,000,000)
6,000,000
3,000,000
4,000,000
1,500,000
P 31,500,000