ACCOUNTING 104 ASSIGNMENT

INSTRUCTION: ANSWER AS REQUIRED. WRITE ANSWERS IN A SEPARATE SHEET OF PAPER.

1. At December 31, 2016, the equity accounts of Batch Corporation were as follows:
Preference share capital (P100 par, 12% participating and cumulative, 100,000 shares) P10,000,000
Preference share capital (P100 par, 10% nonparticipating, noncumulative, 50,000 shares) 5,000,000
Ordinary share capital (P10 par, 1,000,000 shares) 10,000,000
Retained earnings 9,500,000
Batch has never paid cash or share dividend. The capital accounts have not changed since Batch began
operations on January 1, 2012. If the maximum amount available for cash dividend is declared on
December 31, 2016, how much dividend is payable to the ordinary shareholders? Give the entry on
relevant date

2. East Corp., a calendar-year company, had sufficient retained earnings in 2016 as a basis for dividends,
but was temporarily short of cash. East declared a dividend of P100,000 on April 1, 2016, and issued
promissory notes to its shareholders in lieu of cash. The notes, which were dated April 1, 2016, had a
maturity date of March 31, 2017, and a 10% interest rate. How should East account for the scrip dividend
and related interest? Give the entry on the relevant dates.

3. On May 1, 2016 Lett Corp. declared and issued a 15% share dividend. Prior to this dividend, Lett had
100,000, P1 par value, ordinary shares issued and outstanding. The fair value of Lett's ordinary share
was P20 per share on May 1, 2016. Give the entry

4. The directors of Reno Corp., whose P50 par value ordinary share is currently selling at P70 per share,
have decided to issue a share dividend. Reno has an authorization for 250,000 ordinary shares, has
issued 100,000 shares of which 10,000 shares are now held in treasury, and desires to capitalize
P630,000 of the Retained Earnings balance. To accomplish this, the percentage of share dividend that the
directors should declare is _________________

5. An entity declared property dividend to ordinary shareholders. The property had a carrying amount of
P910,000. Fair value on relevant dates:
Date of declaration P950,000
Date of record 930,000
Date of distribution 920,000
Give the entry on the relevant dates.

6. In September 2015, West Corp. made a dividend distribution of one right for each of its 120,000 ordinary
shares outstanding. Each right was exercisable for the purchase of 1/100 of a share of West's P50
variable rate preference shares at an exercise price of P80 per share. On March 20, 2016, none of the
rights had been exercised, and West redeemed them by paying each shareholder P0.10 per right. Give
the entry on relevant dates.

7. On January 2, 2016, Simpson Co.'s board of directors declared a cash dividend of P400,000 to
shareholders of record on January 18, 2016, payable on February 10, 2016. Selected data from
Simpson's December 31, 2015 balance sheet are as follows:
Accumulated depletion P100,000
Share capital 500,000
Share premium 150,000
Retained earnings 300,000
Give the entry on relevant dates.

8. Adverse financial and operating circumstances warrant that Hikahos Company undergo a quasi-
reorganization at the end of the current year. The following information may be relevant in accounting for
the quasi reorganization.
 Inventory with a net realizable value of P5,000,000 is currently recorded in the accounts at its cost of
P7,000,000.
 Plant assets with a recoverable amount of P20,000,000 are currently recorded at P24,000,000 net of
accumulated depreciation.
 Unrecorded accounts payable amount to P3,000,000.
 Individual shareholders contribute P5,000,000 to create share premium to facilitate the
reorganization. No new outstanding shares pass to the company’s shareholders.
 The par value of the ordinary share is reduced from P100 to P50.
 Immediately before these events, the shareholders’ equity section appears as follows.
 Share capital, P100 par value, 500,000 shares
P50,000,000
Share premium 5,000,000
Retained earnings (deficit) (15,000,000)
Give the entries to book the quasi reorganization.
9. At the recommendation of the newly hired president of Leyte Corporation, the board of directors voted to
implement a quasi-reorganization. Immediately prior to the restatement, on June 30, Leyte's balance
sheet was as follows:
Current assets P 550,000
Property, plant, and equipment (net) 1,350,000
Other assets 200,000
P2,100,000
Total liabilities P 600,000
Share capital 1,600,000
Share premium 300,000
Retained earnings (deficit) (400,000)
P2,100,000
The shareholders approved the quasi-reorganization effective July 1, to be accomplished by a reduction in
other assets of P150,000; a reduction in property, plant, and equipment (net) of P350,000; and
appropriate adjustment to the capital structure. Give the entries required to implement the quasi-
reorganization.

10. At December 31, 2015 and 2016, Sloan Corp. had outstanding 9,000 shares of P100 par value 8%
cumulative preference shares and 30,000, P10 par value, ordinary shares. At December 31, 2015,
dividends in arrears on the preference shares were P36,000. Cash dividends declared in 2016 totaled
P135,000. What amounts were payable on each class of share?

11. The capital accounts of Kamprad, Inc. on December 31, 2015, were as follows:
Preference share capital,
20,000 shares, P20 par P 400,000
Share premium - preference 160,000
Ordinary share capital,
50,000 shares, P80 par 4,000,000
Share premium – ordinary 600,000
Retained earnings 360,000

During the year ending December 31, 2016, the following summarizes the transactions affecting the
shareholders’ equity
April 30 - 1,000 preference shares were retired at P25 per share.
June 15 - 2,000 treasury shares, ordinary, were purchased at P85 per share
June 30 - A two-for-one ordinary share split was declared.
July 31 - 800 treasury shares were reissued at P50 per share.
Dec. 31 – Profit for 2016 was P300,000.
Present the shareholders' equity section of the balance sheet on December 31, 2016?