PARTNERSHIP AND CORPORATION: THEORIES
AND PROBLEMS
1. A partnership is a/an –
A. Voluntary and valid agreement
among partners
B. Mutual agency among partners
C. Entity created by the operation
of law
D. Association for profit to be
divided among partners
2. The partnership agreement may be in
the form of A. Written contract
B. Oral contract
C. Implied agreement
D. Any of the above
3. Which of the following partners are not
liable in case of partnership losses but its
liable for partnership debts to the extent
of their personal assets –
A. Capitalist partner
B. Silent partner
C. Industrial partner
D. Secret partner
4. The estimated price of an asset that a
seller is willing to sell an the buyer is also
willing to buy in an open market –
A. Sound value
B. Current value
C. Fair market value
D. Replacement value
5. When a partner invests a non-current in
the partnership business, the recording
should be based on
A. The price dictated by the
investing power
B. The original cost of the asset
C. Adjusted market value of the
asset
D. Fluctuation in prices
6. When an industrial partner joins in the
partnership, his participation should be
booked in the journal and in the same,
affix his signature –
A. Simple journal entry
B. Compound journal entry
C. Memorandum entry
D. Separate entry
7. One of the distinguishing feature of a
partnership as compared to a sole
proprietorship is the “plurality of capital
and drawing accounts”.
A. There is one capital and one
drawing accounts
B. There are two capital and two
drawing accounts
C. There will be as many capital
and
drawing
accounts
depending on the of partners
D. None of the above
8. Failure to stipulate on how profit and
loss be divided among partners. It should
be –
A. In proportion to what has been
contributed
B. Settled in the court of law
C. Equally divided
D. By other legal mean agreeable
among partners
9. In case of the partnership makes profit,
how will an industrial partner be a given
a share?
A. What is just equitable
B. Equally
C. Arbitrary
D. Depending on the court’s
decision
10. A partner who contributes money or
property as well as his work or industry
to the partnership is a/an –
A. Industrial partner
B. Capitalist-industrial partner
C. Capitalist partner
D. Dormant partner
11. The most equitable basis of distributing
by way of capital contributions is –
A. Beginning capital
B. Ending capital
C. Average capital
D. Equally
12. In admission by purchase of interest,
the selling partner may sell their share of
of
partnership’s interest to the incoming
partners at
A. Book value
B. Less than book value
C. More than book value
D. Any of the above
13. In the partnership of A and B with capital
balances of P50,000 and P75,000
respectively and C is admitted by buying
½ of B’s interest for P36,000
A. B, suffered a personal loss of
P1,500
B. The loss is divided between
them on an agreed ratio
C. The sale is at its book value
D. The sale is more than book value
14. Admission of a new partner by
investment will –
A. increase both the asset and
capitalization of the partnership
B. Increase the asset of the
partnership only
C. Increase the capitalization of the
partnership only
D. None of these
15. When bonus given to the old partners –
A. Old partners’ capital accounts
are credited
B. The bonus is divided based on
P/L ratio
C. New partners’ capital account is
debited
D. All of the above
16. In the partnership of ABC, sold b his
partnership interest shares to D. Who
will receive the cash payment made by
D?
A. Partner B
B. The partnership
C. Partners A and B
D. Partners A,B and C
17. When bonus formula indicates that
there is bonus to be given to old partners
A. The new partners’ capital
account will be credited
B. The new partners’ capital
account will be debited
C. The old partners’ capital account
will be credited
D. The old partners’ capital account
will be debited
18. Admission of a partner by purchase of
interest is a
A. Personal transaction between
the selling partner and the
buying partner
B. Transaction
that
increases
assets and capital of the
partners
C. Transaction where interest of
the buying partner is to be
transferred to the selling
partner
D. Transaction where the incoming
partner can claim bonus
19. The following instances may dissolved
the partnership except –
A. Change in partnership name
B. Retirement of a partner
C. Admission of a new partner
D. Incorporation of a partnership
20. Partnership is said to be dissolved when
a
A. New partner is admitted in an
existing partnership
B. Partner dies
C. Partner retires
D. Any of the above
21. When a partner retires, the book of the
partnership should be adjusted as of:
A. The date of retirement
B. The balance sheet date
C. Interim report
D. None of these
22. Which of the following adjustments in
the partnership books are needed in an
event the partner dies?
A. Fair value of the non-cash asset
at the time of death
B. Accrued
items
for
both
receivable and payable
C. Prepayment of expenses and
pre-collection of income
D. All of the above
23. Which of the following will cause the
partnership to be dissolved but will
continue to operate?
A. When a partner dies
B. When a partner retires
C. When a partner withdraws
D. All of the above
24. Which of the following could be possible
cause for dissolution with liquidation of
the partnership business?
A. Death of the partner
B. Retirement of a partner
C. Insolvency of the partner
D. When partnership is being
incorporated
25. The process of winding-up the business
activity is converting non-cash assets
into cash, paying its liabilities and
distribution of cash and the remaining
assets to individual partners –
A. Realization
B. Dissolution
C. Liquidation
D. None of these
26. When the partnership’s non-cash
non-cash assets
are realized at less than its book value
during the liquidation process, its results
to a –
A.
B.
C.
D.
Gain on realization
Loss on realization
Deficiency transactions
None of these
27. The following are the causes of
partnership’s
dissolution
with
liquidation, except
A. Bankruptcy of the firm
B. When a partners dies
C. Mutual
agreement
among
partners to close the business
D. The purpose of which it is
organized
is
accomplished
already
28. When a partner develops a debit balance
in his capital, but such partner has a loan
to the partnership, he may exercise the
doctrine of
A. Right to offset
B. Right to seizure
C. Partner’s right
D. None of these
29. The first priority to be paid when there is
cash available in the liquidation process,
be it in lump sum or installment type –
A. Outside creditors
B. Partners’ loan
C. Partners’ capital
D. None of these
30. In preparing a cash distribution plan, the
partners’ capital and loan accounts
should be –
A. Both separated
B. Combined
C. Segregated
D. None of these
31. Under liquidation by installment, the
partner who receives cash when there is
cash available is the one –
A. Who can sell the biggest portion
of the assets
B. Who has a negligible amount of
liability
C. Who can absorbed the share of
theoretical or possible loss
D. None of these
32. In dissolution by installment, final cash
settlement among the partners are
based on the –
A. Ratio agreed by the partners
B. Partner’s profit and loss sharing
ratio
C. Partner’s capital balance
balance
D. None of these
33. When a partnership is being liquidated,
it usually focused on the following
activities –
A. Terminal activities
B. Investments activities
C. Withdrawal of capital
D. None of these
34. One of the characteristics of liquidation
by lump sum is –
A. Non-cash assets are sold in one
setting only
B. Liabilities will be given the first
priority for payment
C. The non-cash assets are usually
sold at less than book value
D. None of these
35. Which of the following is not an attribute
of a corporation?
A. An artificial being created by the
operation of law
B. Having the rights of succession
C. Have the powers, attributes and
properties expressly authorized
by law or incident to its
existence.
D. Have
limited
shareholders
liability
of
36. Refers to the maximum amount fixed
fixe d by
corporate charter to be subscribed and
paid-in by the shareholder –
A. Authorized share capital
B. Subscribed share capital
C. Unissued share capital
D. Treasury share
37. Refers to the issued share capital and
still in the hands of the shareholders
A. Unissued share capital
B. Authorized share capital
C. Outstanding share capital
D. Subscribed share capital
38. Number of persons required to originally
form a corporation –
A. Not less than five but not more
than fifteen
B. Five persons but not to exceed
15 persons
C. Less than 5 persons only
D. None of the above
39. Which of the following are examples of a
non-share, non-profit corporation?
A. Charitable institution
B. Religious institution
C. Civic and social institution
D. All of the above
A. Fair market value of the
property issued
B. Fair market value of the capital
issued
C. Par value of the share capital
D. All of the above priority
44. When shares are subscribed on an
installment basis, the Additional Paid-in
Capital is recorded at –
A. The time of issuance
B. The time of payment
C. The time of subscription
D. The time of authorization
45. In dividends declaration, there are three
(3) important dates to remember except
A. Date of declaration
B. Date of record
C. Date of issuance
D. Date of payment
46. Shareholder’s share of a corporation’s
accumulated profit from its operation is
termed as –
A.
B.
C.
D.
Liquidating dividends
Dividends out of earnings
Unappropriated dividends
Dividends on hand
47. Which of the following statement is true
concerning share dividends?
A. It reduces retained earnings and
increases share capital
B. It does not change the total
shareholders’ equity
C. Retained earnings is said to have
been capitalized
D. All of the above
40. The maximum life of a corporation to
exist is
A. 50 years
B. 40 years
C. 30 years
D. None of the above
41. Natural persons who have agreed to but
the original and unissued shares of a
corporation are called
A. Corporators
B. Subscribers
C. Promoters
D. None of the above
42. Share certificates are issued to
subscriber upon
A. Full payment of subscription
B. Date of subscription
C. Authorization
D. Partial payment of subscription
48. Treasury shares are recorded at
A. Fair market value at the date of
acquisition
B. At acquisition cost
C. At
acquisition
cost,
plus
incidental cost
D. None of the above
43. If share capital is issued for tangible or
intangible property, the value of share
50. Which of the following statement is true
concerning Retained Earnings?
capital is equal to the following value in
order of priority:
A. It has a normal balance of a
credit
49. Treasury shares can be reissued –
A. At cost
B. Below cost
C. Above cost
D. All of the above
B. It represents the cumulative
profit and losses
C. It decreases when dividends are
declared
D. All of the above
PROBLEMS:
Louche and Sweetsy are partners of Manila “TC”
Merchandising. After a year of successful
business
the partners’
equity
reached tooperations,
a total amount
of P480,000
whichhas
is
50% higher than last year when they have just
started it. The percentage of outside creditors’
creditors’
claim in the total partnership assets is 40%.
Considering that both are general partners,
answer the following questions:
51. How much is the total assets of the
partnership?
A. P100,000
B. P800,000
C. P900,000
D. P1,000,000
52. How much is total claims from outside
creditors?
A. P320,000
B. P480,000
C. P540,000
D. P632,000
Gwapo, Maot and Arangan are planning to form
a partnership with Maot contributing cash of
P75,000 for a 1/5 interest in the partnership.
Gwapo and Arangan will share equally in the
remaining required capitalization.
53. How much are the shares of Gwapo and
Arangan on the remaining capitalization
of the partnership?
A. P75,000 each respectively
B. P80,000 each respectively
C. P150,000 each respectively
D. P200,000 each respectively
P350,000 on the same date, three hours after
formation of the partnership.
55. How much should be the capital balance
of Raymark right after the formation?
A. P200,000
B. P300,000
C. P350,000
D. P400,000
56. At what amount that investment of
Daisy Ree be recorded?
A. P300,000
B. P320,000
C. P350,000
D. P400,000
On March 1, 2017 Mae Adulhesa and Dheo
Pondoc formed a partnership with each
contributing the following assets:
Cash
A/R
Merchandise
Building
Adulhesa
P400,000
120,000
50,000
-
Pondoc
P600,000
60,000
1,050,000
As agreed, 10% allowance for uncollectible
account must be established. The building has a
mortgage loan balance of P300,000 which is to
be assumed by the partnership. The partners
further agree on a ratio 3:2 as the basis for profit
and loss distribution.
57. How much would be the capital balance
of Adulhesa and Pondoc right after the
partnership formation?
A. P1,968,000
B. P2,280,000
C. P2,370,000
D. P2,450,000
58. Assuming
that
the
mortgage
loan
balance is not assumed by the
partnership, how much would be the
capital balance contribution of Pondoc?
A. P1,410,000
B. P1,710,000
C. P1,810,000
D. P1,950,000
54. How much is the total assets of the
partnership upon formation?
A. P300,000
B. P350,000
C. P375,000
D. P400,000
Ronaldo Bundaco and Jessa Branzuela formed a
partnership with following contributions:
On January 1, 2017, Raymark and Daisy Ree
formed a partnership, agreeing to share profits
and losses of 40% and 60% respectively. Raymark
invested a parcel of land that cost him P300,000.
*Bundaco contributed a parcel of land which
cost his father P100,000. The land has a fair
market value of P150,000 when the land was
inherited by him 3 years ago and currently has a
fair market value of P200,000 and cash of
Daisy Ree invested cash of P200,000 and an
equipment costing P100,000 but has a fair
market value of P120,000. The land was sold for
P50,000.
*Branzuela on the other hand contributed cash
equal to ¾ of Guimad’s capitalization.
59. At what amount should land be valued in
the partnership book?
A. P100,000
B. P150,000
C. P200,000
D. P250,000
60. At what amount should Branzuela’s
capital account be credited?
A. P150,000
B. P187,500
C. P190,000
D. P195,000
61. Assuming that the land is sold for
P220,000 a week after the formation,
what amount should be recorded as
Bundaco’s capital account balance
during the partnership formation?
A. P187,500
B. P200,000
C. P237,500
D. P250,000
On March 1, 2017 Loremie Simbajon formed a
partnership with Kent Taperla and made the
following contributions:
Cash
P350,000
Non-Cash
P100,000
At the end of the year, Simbajon received a share
of P32,000 on the P80,000 profit.
62. What should be the share of Taperla on
the partnership profit?
A. 35%
B. 40%
C. 50%
D. 60%
Jeepee John and Louche Celestial formed a
general
professional
partnership.
Their
investments follow:
John
P150,000
Celestial
P200,000
Profit for distribution was P98,000. The following
errors were discovered before the final closing of
the books:
a. Understatement of salaries paid to the
staff, P5,000.
b. Overstatement of recorded depreciation
A.
B.
C.
D.
P90,000
P95,000
P96,000
P100,000
64. Assuming that there was no written
agreement on how profit and loss is
divided, how much is the share of John
on the corrected profit?
A. P40,381
B. P41,143
C. P54,857
D. P55,385
Divine Dequito and Dennis Javier established a
partnership business engaged in selling of “dried
fish” in Pagadian City aside from their modest
accounting practice. Their venture attained a
considerable success so that at the end of the
year 2017, Dequito receives P75,000 as her share
in profit. If the profit and loss ratio 3:2.
65. How much was Javier’s share?
share?
A. P50,000
B. P85,000
C. P112,000
D. P115,000
66. How much amount of profit that
t hat Dequito
and Javier shared?
A. P125,000
B. P160,000
C. P187,500
D. P190,000
Deogracia Corpuz, Thelma Ciudadano, Jesus
Luntao are into a partnership business, agreeing
to divide their profit and losses based on the
following ratios:
Corpuz, 50%; Ciudadano, 30% and Luntao, 20%.
The partnership reported profit of P80,000.
Their capital balances after operating for several
years followed:
Corpuz
P60,000
Ciudadano
P120,000
Luntao
P80,000
67. How much is Ciudadano’s share on the
partnership profit if percentages are
applied after each partner receives a
P20,000 salary allowance?
A. P24,000
B. P26,000
C. P30,000
D. P40,000
by P3,000.
63. How much is the corrected Profit?
Esterlina Gevera, Edelyn Tropico and Evelyn
Canque are partners of City Travel and Tours. As
at December 31, 2016, the statement of
Financial Position reveals their respective capital
balances and the profit and loss ratio as follows:
PARTNERS
CAPITAL
P/L RATIO
BALANCES
Gevera
P210,000
1
Tropico
P340,000
2
Canque
P250,000
2
On January 1, 2017 Eduardo Degracia is admitted
in the existing partnership by allowing him to
purchase ¼ shares of partnership’s interest and
pays P250,000 provided that all partners will
continue to participate their share profit in the
original ratios.
68. What is the capital credit of Degracia?
A. P200,000
B. P250,000
C. P300,000
D. P350,000
69. Who shall receive the payment?
A. Gevera
B. Tropico
C. Canque
D. Partnership
A.
B.
C.
D.
Tropico
10%
30%
15%
35%
Canque
45%
30%
20%
25%
Deg.
20%
25%
45%
25%
71. What is the partner’s equity balances of
Gevera after the admission of Degracia?
A. P157,500
B. P187,500
C. P255,000
D. P300,000
The statement of Financial Position of Weny
Panganiban and Jessica Salisana showed among
others the following capital balances just before
Luane Paquera is admitted in the partnership by
buying ¼ and 1/5 of Panganiban and Salisan’s
respective share:
Partners
Capital
Allowance for doubtful accounts should
be increased from P10,000 to P15,000.
b. Merchandise should be valued from
P100,000 down to P85,000.
c. Equipment’s net book value of P115,000
should be revalued at P130,000 based
on the fair market value.
72. At what amount Paquera has to pay the
old partners if the purchase is at book
value after adjustment?
A. P400,380
B. P410,937
C. P414,375
D. P415,875
73. Who shall receive the cash proceeds
from the sale?
A. Panganiban only
B. Salisana only
C. Panganiban and Salisana
D. Partnership
74. The present capital of the old and new
partners after admission –
70. What should be the new profit and loss
ratio of the partners?
Gevera
25%
15%
20%
15%
a.
Fractional
Share
Panganiban
P950,000
5/10
Salisana
P890,000
5/10
The partners agreed to make adjustments on the
valuation of the following current and noncurrent assets:
A.
B.
C.
D.
P1750,000
P1,835,000
P1,950,000
P1,980,000
Pura Luz Igao and Sofia Goden are partners of
Southexpressway Merchandising. They shared
profit and loss on an arbitrary ratio of 3:2.
Junaline Estroso, has joined the partnership by
buying ½ of Igao’s interest in the partnership for
P220,000. The partners’ respective capital
balance on December 31, 2016 before the
admission are as follows:
Igao
P450,000
Goden
P300,000
Towards the end of 2017, the partnership
realized profit of P90,000.
75. What was the book value of Igao’s
interest sold to Estroso?
A. P200,000
B. P225,000
C. P250,000
D. P275,000
76. How much was Igao’s personal loss in
selling her interest to Estroso?
A. P3,000
B. P4,000
C. P5,000
D. P6,000
77. At what amount that Estroso be credited
as new partner?
A. P200,000
B. P225,000
C. P250,000
D. P275,000
Annabelle Linobo, Rowena Manansala and
Emma Cequina are partners with capital
balances and profit sharing ratio as follows:
Linobo
P150,000
Manansala
P100,000
Cequina
P120,000
Cap.
Balances
P/L ratio
2
3
1
Rommel Cahayag wishes to join the partnership
business by purchasing ¼ of Cequina’s interest
where the rest of the partners agree.
Adjustments will be made on the following
items:
a. Inventory at the end of the period was
reported at P60,000 when it should have
been P70,000.
b. Depreciation was understated by P6,000
Cahayag pays P35,000 to Cequina.
78. How much is corrected partner’s equity
balance?
A. P118,000
B. P120,800
C. P123,200
D. P125,000
79. How much is the personal gain or loss of
Cequina?
A. P4,800 gain
B. P3,400 loss
C. P4,050 loss
D. P5,100 gain
80. If the Statement of Financial Position is
prepared right after the admisiion of
Cahayag, He will have a share capital
credit of
A. P29,800
B. P30,200
C. P31,200
D. P32,000
Cecil Rosada and Andreau Torralba are partners
sharing a profit and loss in the ratio of 3:7. Their
capital balances before winding-up their
business affairs were as follows:
Rosada, Capital
P50,000
Torralba, Capital
P55,000
The partners were able to sell their non-cash
assets and realized P180,000 from the sale. After
paying its liabilities of P145,000, they have
P35,000 cash to divide between the two of them.
81. How much is the book value of the noncash assets sold?
A. P215,000
B. P250,000
C. P235,000
D. P200,000
82. How much is the share of Torralba in the
realization loss?
A. P35,000
B. P33,000
C. P49,000
D. P39,000
83. How much is the share of Rosada in the
cash available for distribution?
A. P29,000
B. P39,000
C. P49,000
D. P59,000
The partnership of Rebecca Miranda and Haydee
Dabucol is liquidated on August 31, 2016. The
account balances prior to the liquidation process
showed the following:
Cash
P2,000
Non-Cash
200,000
Accounts Payable
P134,000
Miranda, Loan
8,000
Miranda, Capital
30,000
Dabucol, Capital
30,000
The partners shared profit and loss on a 60%40% basis. The non-cash were realized for
P140,000.
84. How much is the gain or loss on
realization?
A. P45,000 gain
B. P50,000 gain
C. (P60,000) loss
D. (P70,000) loss
85. How much is the share of Dabucol on
the gain or loss realization?
A. P6,000
B. P24,000
C. P36,000
D. Some other answer
Contributed Capital
8% Preference of
Shares
Discount
of
preference shares
P400,000
P2,000
Ordinary shares
Subscribed
share
capital – Preference
Subscribed
share
capital – Ordinary
Subscription
Receivable
–
Preference
Subscription
Receivable – Ordinary
Share Premium –
Ordinary
Revaluation
Increment
of
Property
Retained Earnings
P700,000
P300,000
P100,000
P75,000
P50,000
A.
B.
C.
D.
Preference
Ordinary
50,000 shares
52,000 shares
53,000 shares
55,000 shares
187,500 shares
190,000 shares
192,500 shares
193,000 shares
90. What would be the minimum amount
for subscription payment as required?
P40,000
Preference
Ordinary
P12,500
P13,000
P13,500
P14,000
P46,875
P47,500
P48,300
P49,000
P15,000
P1,835,000
86. How much was legal capital of the
corporation?
A. P1,400,000
B. P1,500,000
C. P1,600,000
D. P1,700,000
A.
B.
C.
D.
Davao John Corporation is authorized to issue
4,000 of ordinary shares with a par value of P100
per share
For incorporation
following questions:
purposes,
answer
the
91. How much is the authorized share
87. How much Shareholder’s Equity balance
as of December 2016?
A. P3,263,000
B. P3,405,000
C. P3,530,000
D. None of these
Problem
Ozamiz Jeepee Corporation was approved by the
Securities and Exchange Commission to operate
with authorized share capital and par value as
follows:
Preference
2,000 P100
shares
Ordinary 5,000 shares P150
Incorporators of the corporation have
subscribed the minimum number of shares
required and some with subscription payment
requirement.
88. How many shares of preference and
ordinary, that JP’s Corporation is
authorized to issue?
A.
B.
C.
D.
Preference
Ordinary
P200,000
P250,000
P300,000
P350,000
P750,000
P800,000
P850,000
P900,000
capital?
A. P200,000
B. P300,000
C. P400,000
D. None of these
92. How much is the subscribed share
capital?
A. P100,000
B. P140,000
C. 160,000
D. None of these
93. How much of the subscribed share
capital that must be paid up?
A. P25,000
B. P36,000
C. P49,000
D. None of these
The Orland Corporation’s Income and Expense
Summary and Retained Earnings accounts prior
to final closing showed the following postings:
Income & Expense Summary Expense
Debit Side: Dec. 31, 2016 – P1,050,000
Credit Side: Dec. 31, 2016 – P1,800,000
Retained Earnings
Debit Side: Jan. 1, 2016 – P0
89. How many shares are required by
incorporators of JP’s Corporation to
meet the minimum requirement?
Credit Side: Jan. 1, 2016 – P100,000
94. How much is the Orland Corporation’s
Profit or Loss during 2016 operations?
A. (P750,000)
B. P750,000
C. P850,000
D. None of these
95. How much is the balance of Retained
Earnings account as of December 31,
2016?
A. P650,000
B. P750,000
C. P850,000
D. None of these
Ronaldo Corporation’s shareholders’ equity
comprise of 8,000 shares of P200 par ordinary
shares, P400,000 of additional paid-in capital
and Retained Earnings of P900,000. Share
dividends of 6% was declared when the stock
was selling for P500 per share.
96. What amount of Retained Earnings
account should be transferred to Share
Capital?
A. P1,920,000
B. P4,800,000
C. P240,000
D. P96,000
On June 30, 2016, Kent Corporation issued 4,000
shares of its P100 par ordinary share in
connection with a share dividend. Kent
shareholders’ equity accounts immediately
before issuance of the share dividend were as
follows:
Ordinary Share P100
par, 50,000 shares
P2,000,000
authorized,
20,000
shares outstanding
Additional
Paid-In
Capital
Retained Earnings
3,000,000
1,500,000
97. What should be the retained earnings
balance immediately after the share
dividend?
A. P1,100,000
B. P1,500,000
C. P2,100,000
D. P900,000
MAKAPASAR RA LAGI KA Corporation with listed
shares at Philippine Stock Exchange declared a
15% shared dividends. The company has 30,000
shares issued and outstanding with a par value
P100. On the date of declaration, the market
value per share is P120.
98. What amount of Retained Earnings that
should be capitalized?
A. P450,000
B. P540,000
C. P600,000
D. P750,000
99. Assuming, the corporation declares 25%
share dividend, and the market value per
share is P110, what amount of Retained
Earnings that should be capitalized?
c apitalized?
A.
B.
C.
D.
P750,000
P825,000
P900,000
P950,000
SALIG LANG AYAW OG LAOM Corporation holds
10,000 shares of its P10 par value ordinary
shares as treasury shares reacquired in 2016 for
P120,000. On December 31, 2017, the company
issued all 10,000 shares for P190,000.
100.
Under
cost
method
of
accounting for treasury shares, the
reissuance would result in a credit to –
A. Share Capital of P100,000
B. Retained
Earnings
of
P70,000
C. Gain on Sale of Investments
of 70,000
D. Share Premium of P70,000