Accounting for Partnership and Corporation

Baysa & Lupisan

2011 edition

TEST MATERIAL
SUGGESTED ANSWERS
CHAPTERS 1 to 10
CHAPTER 1

TM 1
1. T 6. T 11. F 16. F 21. T
2. F 7. F 12. F 17. T 22. T
3. T 8. F 13. F 18. F 23. T
4. F 9. T 14. F 19. F 24. F
5. F 10. T 15. T 20. T 25. T

TM 2
1. D 6. B 11. B 16. B
2. D 7. C 12. A 17. C
3. C 8. C 13. D 18. C
4. B 9. B 14. C 19. B
5. A 10. A 15. C 20. C

TM 3
1. B 6. D 11. A 16. A 21. B
2. C 7. A 12. C 17. D 22. C
3. C 8. C 13. A 18. A 23. A
4. C 9. A 14. C 19. C 24. D
5. B 10. C 15. C 20. D 25. B

TM 4
1. C 4. D 7. A 10. D 13. A
2. C 5. B 8. C 11. A 14. A
3. E 6. A 9. D 12. E 15. A

TM 5
1. O 6. F 11. P 16. Q
2. B 7. E 12. T 17. V
3. H 8. A 13. M 18. W
4. N 9. I 14. G 19. S
5. K 10. X 15. Z 20. D

CHAPTER 2

TM 6
1. F 5. T 9. T 13. T 17. F
2. F 6. T 10. T 14. T 18. T
 3. F 7. F 11. F 15. F 19. T
4. T 8. T 12. T 16. F 20. T
TM 7
1. Limited partnership 11. Articles of Co-Partnership
2. Industry, skill, talent or service 12. Secret partner
3. Capitalist industrial partner 13. Securities and Exchange Commission
4. Mutual agency 14. Limited or LTD.
5. De facto partnership 15. Limited partner
6. Memorandum entry 16. Loan Payable
7. Nontrading partnership 17. Capital share
8. Partnership 18. Bonus
9. Agreed value 19. Arrive at Agreed value or FMV
10. Dormant partner 20. General professional partnership

TM 8
1. A 5. C 9. D 13. A 17. A
2. B 6. D 10. D 14. B 18. C
3. D 7. D 11. A 15. C 19. C
4. B 8. B 12. C 16. C 20. D

TM 9
Problem A

1. Cash 800,000
Land 375,000
Building 1,250,000
Furniture and Fixtures 625,000
Accounts Payable 250,000
Alvis, Capital 1,375,000
Ancheta, Capital 1,425,000

2. Cash 800,000
Land 375,000
Building 1,250,000
Furniture and Fixtures 625,000
Accounts Payable 250,000
Alvis, Capital 1,400,000
Ancheta, Capital 1,400,000

3. Cash 800,000
Land 375,000
Building 1,250,000
Furniture and Fixtures 625,000
Goodwill 50,000
Accounts Payable 250,000
Alvis, Capital 1,425,000
Ancheta, Capital 1,425,000
Problem B

1. a. Ablan, Capital 50,000

Accounts Receivable 50,000

b. Ablan, Capital 27,500

Inventories 27,500

c. Ablan, Capital 10,000

Other Assets 10,000

a. Amias, Capital 75,000

Accounts Receivable 75,000

b. Amias, Capital 33,500

Inventories 33,500

c. Amias, Capital 18,000

Other Assets 18,000

2. a. Accounts Payable 894,700

Notes Payable 1,000,000
Ablan, Capital (P3,209,880 – P50,000 – P27,500 – P10,000) 3,122,380
Cash 55,000
Accounts Receivable 1,122,680
Inventories 572,675
Land 3,015,000
Furniture and Fixtures 251,725

b. Accounts Payable 1,218,250

Notes Payable 1,725,000
Amias, Capital (P3,641,760 – P75,000 – P33,500 – P18,000) 3,515,260
Cash 111,770
Accounts Receivable 2,764,450
Inventories 1,267,010
Buildings 2,141,335
Furniture and Fixtures 173,945

3. a. Cash 55,000
Accounts Receivable 1,122,680
Inventories 572,675
Land 3,015,000
Furniture and Fixtures 251,725
Accounts Payable 894,700
Notes Payable 1,000,000
 Ablan, Capital 3,122,380

b. Cash 111,770
Accounts Receivable 2,764,450
Inventories 1,267,010
Buildings 2,141,335
Furniture and Fixtures 173,945
Accounts Payable 1,218,250
Notes Payable 1,725,000
Amias, Capital 3,515,260

Ablan and Amias Partnership

Statement of Financial Position
May 1, 2009

Assets
Current Assets
Cash P 166,770
Accounts Receivable 3,887,130
Inventories 1,839,685 P 5,893,585
Noncurrent Assets
Land P 3,015,000
Buildings 2,141,335
Furniture and Fixtures 425,670 5,582,005
Total Assets P 11,475,590

Liabilities and Capital

Notes Payable P 2,725,000
Accounts Payable 2,112,950
Total Liabilities P 4,837,950

Ablan, Capital P 3,122,380

Amias, Capital 3,515,260
Total Capital 6,637,640
Total Liabilities and Capital P 11,475,590
CHAPTER 3

TM 10
1. F 5. T 9. F 13. T 17. T
2. F 6. F 10. T 14. T 18. F
3. T 7. T 11. T 15. F 19. T
4. T 8. T 12. T 16. T 20. T

TM 11
1. F 4. B 7. C 10. E 13. J
2. G 5. A 8. H 11. L 14 N
3. M 6. P 9. D 12. O 15. Q
TM 12
1. D
2. B
3. B
4. C
5. C
6. C Beltran Barba Total
Capital beginning P400,000 P500,000 P900,000
Share in net income-equally 200,000 200,000 400,000
Share in net loss – 2:1 ( 160,000) ( 80,000) ( 240,000)
Capital, end P440,000 P620,000 P1,060,000

7. D P2,500,000 + (P1,800,000 + P400,000) = P4,700,000 – P2,000,000 = P2,700,000

8. B Beran and Banda = 300/1,100 x P1,100,000 = P300,000;
Banjo = 500/1,100 x P1,100,000 = P500,000
9. B Banzon Borja Total
Salaries P160,000 P200,000 P360,000
Interest on beginning capital 36,000 60,000 96,000
Remainder – equally 72,000 72,000 144,000
Total P268,000 P332,000 P600,000
10. B P520,000 – P100,000 – P240,000 = P180,000 / 20% = P900,000
11. D Jan. 1 – June 30 P 840,000 x 6 = P5,040,000
July 1 – July 31 1,080,000 x 1 = 1,080,000
Aug. 1 – Dec. 31 990,000 x 5 = 4,950,000
P11,070,000/12 = P922,500 x12%=P110,700
12. C Basilio Bituin Total
Salaries P220,000 P 180,000 P400,000
Remainder – 60:40 ( 24,000) ( 16,000) ( 40,000)
Total P 196,000 P 164,000 P360,000
13. A P1,000,000 + (P1,800,000 x 20%) – P200,000 = P1,160,000
14. C P600,000 + P200,000 = P800,000/2 = P400,000
15. B P450,000 x 60% = P270,000

TM 13
Problem A

Beltran, Bernal and Basco Partnership

Schedule of the Distribution of Partnership Profit

Beltran Bernal Basco Total

Salaries P57,600 P48,000 P38,400 P144,000
Interest 34,560 46,080 66,240 146,880
Balance – equally 55,040 55,040 55,040 165,120
Total distribution of net income P147,200 P149,120 P159,680 P456,000
 Beltran, Bernal and Basco Partnership
Statement of Changes in Partners’ Equity
For the Year Ended December 31, 2009

Beltran Bernal Basco Total

Original capital P384,000 P576,000 P864,000 P 1,824,000
Add: Additional investment 96,000 96,000
Share in net income 147,200 149,120 159,680 456,000
Total P627,200 P725,120 P1,023,680 P2,376,000
Less Drawing ( 48,000) ( 48,000) (192,000) ( 288,000)
Capital, December 31, 2008 P579,200 P677,120 P831,680 P2,088,000

Problem B
1.
Double B Partnership
Income Statement
For the Year Ended December 31, 2009

Sales P1,800,000
Cost of goods sold:
Inventory, January 1 P 800,000
Purchases 1,200,000
Cost of goods available for sale P2,000,000
Less Inventory, December 31 1,100,000 900,000
Gross profit P900,000
Operating expenses:
Depreciation – building P30,000
Depreciation – furniture and fixtures 30,000
Other operating expenses 300,000 360,000

Net income before Income Tax P540,000

Income Tax 189,000

Net Income after Income Tax P351,000

2. Net income is allocated as follows:

Bilbao Bragas Total
Salaries P240,000 P240,000 P480,000
Interest on beginning capital 75,000 62,000 137,000
Remainder -2:3 (106,400) (159,600) (266,000)
 Total P208,600 P142,400 P351,000

Income Summary 351,000

Bilbao, Capital, 208,600
Bragas, Capital 142,400

3. Bilbao, Capital 200,000

Bragas, Capital 240,000
Bilbao, Drawing 200,000
Bragas, Drawing 240,000
Double B Partnership
Statement of Changes in Partners’ Equity
For the Year Ended December 31, 2009
Bilbao Bragas Total
Capital, January 1 P1,300,000 P1,240,000 P2,540,000
Add: Additional investment 200,000 200,000
Share in net income 208,600 142,400 351,000
Total P1,708,600 P1,382,400 P3,091,000
Less Drawing 200,000 240,000 440,000
Capital, December 31 P1,508,600 P1,142,400 P2,651,000

CHAPTER 4

TM 14
1. T 6. F 11. F 16. T
2. F 7. T 12. F 17. T
3. T 8. T 13. F 18. F
4. F 9. F 14. T 19. T
5. F 10. T 15. T 20. T

TM 15
1. Asset Revaluation 11. Admission by investment
2. Agreed capital 12. Bonus to new partner
3. Bonus 13. Liquidation
4. Total contributed capital 14. Capital credit
5. Dissolution 15. When agreed capital is not given
6. Interest 16. Old partners’ capital
7. Dissolution 17. Fraction of interest
8. Sale of interest to a partner 18. Positive Asset Revaluation
9. Agreed capital 19. Personal gain or loss
10 Admission by purchase 20. Net advantage

TM 16
1. B
2. C
3. A
4. B
 5. B
6. D
7. A
8. A P160,000 + P380,000 = P540,000 x 1/4 = P135,000
9. B
10. C P120,000 + (P20,000* x 1/5) = P124,000
AC CC Bonus
*old partners P420,000 P400,000 P20,000
new partner 140,000 160,000 (20,000)
P560,000 P560,000 ------
AC CC Bonus
11. C old partners P320,000 P360,000 (P40,000)
new partner 160,000 120,000 40,000
P480,000 P480,000 -
12. C (P100,000 + P200,000)  3/4 = P400,000 x 1/4 = P100,000
13. B Cariaso Carino Carillo
Capital balances before admission of P400,000 P200,000 P100,000
Cardel
Asset Revaluation
(P200,000  1/4) - P700,000 = P100,000 60,000 30,000 10,000
Capital balances after asset revaluation P460,000 P230,000 P110,000
Fraction of remaining interest ¾ ¾ ¾
Capital balances after admission of Cardel P345,000 P172,500 P82,500
14. A P400,000 x 3/4 = P300,000; P200,000 x 3/4 = P150,000; P100,000 x 3/4 = P75,000
15. B
16. C AC CC Bonus
Cariaso P385,000 P400,000 (P15,000)
Carino 192,500 200,000 (7,500)
Carillo 97,500 100,000 (2,500)
Cardel 225,000 200,000 25,000
P900,000 P900,000 -
17. B Coral Camus Cerda Cordero Total
Capital bal. before the
admission of Cordero P190,000 P160,000 P120,000 P470,000
Transfer of 15% int. ( 24,000 P 24,000 ------
)
Investment of Cordero 160,00 160,000
0
Asset Revaluation 15,000 9,000 6,000 30,000
Bonus to old partners 22,000 13,200 8,800 (44,000 ------
)
Capital bal. after the
admission of Cordero P227,000 P158,20 P134,80 P140,00 P660,000
0 0 0
18. B
19. A
20. A Coral 50% x 80% = 40% Cerda 20% x 80% = 16%
Camua 30% x 80% = 24% Cordero 20%
TM 17
Problem A

1. Asset revaluation to old partners - P100,000; no bonus

AC CC Asset Rev
Old P600,000 P500,000 P100,000
New 150,000 150,000 -------

P750,000 P650,000 P100,000

2. No asset revaluation; bonus to old partners - P20,000

AC CC Bonus
Old P520,000 P500,000 P 20,000
New 130,000 150,000 ( 20,000)

P650,000 P650,000 -------

3. No asset revaluation;, bonus to new partner - P45,000

AC CC Bonus
Old P455,000 P 500,000 (P45,000)
New 195,000 150,000 45,000
P650,000 P650,000 ------

4. Asset revaluation to old partners - P100,000; bonus to old partners - P37,500

AC CC Asset Rev Bonus
Old P637,500 P500,000 P100,000 P 37,500
New 112,500 150,000 ------- ( 37,500)
P750,000 P650,000 P100,000 -------

5. No asset revaluation; bonus to old partners - P20,000.

AC CC Bonus
Old P520,000 P500,000 P 20,000
New 130,000 150,000 ( 20,000)

P650,000 P650,000 --------

P750,000 P650,000 P100,000

Problem B
Total capital of the partnership [(P148,000 + P260,000 + P192,000)  80%] P750,000
Interest of Cinco x 20%
 Contribution of Cinco P150,000

Problem C

Carandang Cojuangco Capistrano

Capital balances before the admission of Canete P240,000 P120,000 P60,000
Asset revaluation [(P120,000  1/4) - P420,000] 36,000 18,000 6,000
Capital balances after asset revaluation P276,000 P138,000 P66,000
Remaining interest x 3/4 x 3/4 x 3/4
Capital balances after the admission of Canete P207,000 P103,500 P49,500

CHAPTER 5

TM 18
1. F 5. F 9. T 13. T 17. T
2. T 6. T 10. F 14. T 18. T
3. T 7. F 11. T 15. F 19. F
4. F 8. T 12. F 16. T 20. F
TM 19
1. B
2. C
3. A
4. A
5. C
6. A P160,000 - (P40,000 x 1/2) = P140,000
7. C P40,000  40% = P100,000 x 30% = P30,000 + P160,000 = P190,000
8. A
9. A P80,000 + P160,000 - P40,000 = P200,000
10. B P40,000 x 3/5 = P24,000; P40,000 x 2/5 = P16,000

TM 20
1. Diones, Capital 56,000
Donato, Capital 42,000
Dulay, Capital 14,000

2. Diones, Capital 56,000

Dumlao, Capital 56,000

3. Diones, Capital 56,000

Inventories 12,000
Equipment 16,000
Allowance for Uncollectible Accounts 8,000
Cash 60,000
Donato, Capital 10,000
Dulay, Capital 6,000

4. Diones, Capital 56,000

 Donato, Capital 2,500
Dulay, Capital 1,500
Cash 60,000

5. Diones, Capital 56,000

Donato, Capital 17,500
Dulay, Capital 10,500
Cash 40,000
Equipment 44,000

CHAPTER 6

TM 21
1. F 6. F 11. T 16. F
2. F 7. T 12. T 17. T
3. T 8. T 13. F 18. F
4. T 9. F 14. T 19. T
5. T 10. T 15. T 20. T

TM 22
1. Loan payable 11. Marshaling of assets
2. Lump-sum liquidation 12. Capital deficiency
3. Right of offset 13. Gain on realization
4. Liquidation 14. Liquidation expenses
5. Realization 15. Loss to the other partner
6. Loan rec’l from partner 16. Capital balance
7. Installment liquidation 17. Personal creditors
8. Deficient partner 18. Additional investment
9. Statement of liquidation 19. Addition to capital
10. Insolvent partner 20. Profit and loss ratio

TM 23
1. A
2. D
3. D
4. C
5. D
6. C
7. B
8. A
9. C
10. D
11. D
12. A P100,000/4 = P25,000
13. C P120,000 x 1/3 = P40,000; P120,000 x 2/3 = P80,000
14. A P75,000 x 2/5 = P30,000; P75,000 x 3/5 = P45,000
15. C P60,000 + P90,000 - P30,000 = P120,000
16. A Emy Ely Evy
 Capital balances before liquidation P280,000 P160,000 P20,000
Distribution of loss on realization ( 70,000) ( 42,000) ( 28,000)
Balances P210,000 P118,000 (P 8,000)
Additional loss for
the deficiency of Evy ( 5,000) ( 3,000) 8,000
Balances P205,000 P115,000
Cash payments to partners ( 205,000) ( 115,000)
17. C P320,000 - (P120,000 x 4/10) = P272,000
18. A Eden Elisa Elma
Capital balances before liquidation P320,000 P 90,000 P110,000
Distribution of loss on realization ( 144,000) ( 180,000) ( 36,000)
Balances P176,000 (P 90,000) P 74,000
Additional loss for the deficiency of
Elisa ( 72,000) 90,000 ( 18,000)
Payment to Elma P 56,000

19. C Estacio Estioco

Capital balances (P21,000) P21,000
Loan 45,000
Cash payment to partners P24,000 P21,000
20. D

TM 24 – N/A

CHAPTER 7

TM 25
1. E 5. H 9. I 13. A
2. M 6. M 10. C 14. N
3. K 7. D 11. B 15. L
4. F 8. G 12. J

TM 26
1. A
2. D
3. B
4. D
Abril Suarez Custodio
Capital balances before liquidation P74,000 P130,000 P96,000
Profit and loss ratio 40% 40% 20%

Loss absorption balance P185,000 P325,000 P480,000

Allocation 1 – Cash to Custodio to reduce his
balances to that of Abril and Suarez
 (P155,000 x 20% = P31,000) (155,000)
Balances P185,000 P325,000 P325,000
Allocation 2 – Cash to Suarez and Custodio to
reduce their balances to that of Abril
(P140,000 x 40% = P56,000;
P140,000 x 20% = P28,000) (140,000) (140,000)
Balances P185,000 P185,000 P185,000
Allocation 3 – further cash distribution shall be made based on P & L ratio

Abril Suarez Custodio

Allocation 1 P31,000
Allocation 2 – P9,000 x 4/6 P6,000
P9,000 x 2/6 P3,000
P ------ P6,000 P34,000

5. D
Allocation 1 P31,000
Allocation 2 – P3,000 x 4/6 P2,000
P3,000 x 2/6 P1,000
P ------ P2,000 P32,000

6. D P24,000 x 4/10 = P9,600; P24,000 x 2/10 = P4,800

7. D
Donato Munoz Torres
Capital balances before liquidation P 72,000 P 80,000 P86,000
Add Loan balance 20,000
Total partners’ interest P 72,000 P100,000 P86,000
Profit and loss ratio 30% 50% 20%
Loss absorption balance P240,000 P200,000 P430,000
Allocation 1 – Cash to Torres to reduce his
balance to that of Donato and Munoz
(P190,000 x 20% = P38,000 (190,000)
Balances P240,000 P200,000 P240,000
Allocation 2 – Cash to Donato and Torres to
reduce their balances to that of Munoz
(P40,000 x 30% = P12,000;
P40,000 x 20% = P8,000) (40,000) (40,000)
Balances P200,000 P200,000 P200,000
 Allocation 3 – Further cash distribution shall be
based on P & L ratio
8. C
9. B Available cash = P30,000 + P80,000 – P62,000 = P48,000
Allocation 1 P38,000
Allocation 2 – P10,000 x 3/5 P6,000
P10,000 x 2/5 P4,000
P6,000 P ---- P42,000

10. A

Allocation 2 Balance – P10,000 x 3/5 P 6,000

P10,000 x 2/5 P4,000
Allocation 3 – P & L ratio 21,000 P35,000 14,000
P27,000 P35,000 P18,000

TM 27 – N/A

CHAPTER 8

TM 28
1. T 6. T 11. T 16. F 21. T
2. F 7. F 12. T 17. T 22. T
3. F 8. F 13. F 18. T 23. T
4. T 9. T 14. F 19. F 24. F
5. F 10. T 15. T 20. F 25. T

TM 29
1. Corporation 11. Outstanding share capital
2. Incorporation 12. Delinquent subscriber
3. Domestic corporation 13. 25%
4. Incorporators 14. 25%
5. Pre-operating costs/organization costs 15. Paid-in capital in excess of stated value
6. Stated value 16. P5.00
7. Ordinary share capital 17. 50 years
8. Preference share capital 18. Stock certificate
9. Par value 19. P Receivable from highest bidder
10 Ordinary share capital 20. Goodwill

TM 30
1. C 5. C 9. A 13. C 17. D
2. C 6. A 10. B 14. B 18. A
 3. D 7. B 11. B 15. C 19. C
4. C 8. D 12. C 16. B 20. D

TM 31
Problems
A. 1. P50,000 P60,000 (total) – P10,000 (land) = P50,000
2. P55 P2,750,000 / 50,000 sh = P55
3. 500,000 sh P5,000,000 / P10 = 500,000 sh
4. P15 P7,500,000 / 500,000 sh = P15
5. P50,000 P550,000 – (10,000 sh x P50) = P50,000

B. 1. P100 / 325 sh P42,250/P130 = 325 shares; P32,500/325 sh = P100

2. P70,000 P120,000 – (1,000 x P50) = P70,000
3. P50,000
4. P2,460,000 (24,000 sh x P60) + (6,000 sh x P120) + (2,000 sh x P150)
5. P64,000 8,000 sh x P8 = P64,000
C.
1. 57,600 sh P2,880,000 / P50
2. 272,000 sh P2,720,000 / P10
3. 28,800 sh P1,440,000 / P50
4. 56,000 sh P560,000 / P10
5. P55 (P4,320,000 + P432,000) / (57,600 + 28,800) = P55
6. P12 (P3,280,000 + P656,000) / (272,000 + 568,000) = P12
7. P25 P720,000 / 28,800 = P25
8. P5.50 P12 – (P364,000/56,000)

CHAPTER 9

TM 32
1. T 5. F 9. F 13. T 17. T
2. T 6. F 10. F 14. T 18. F
3. T 7. F 11. T 15. F 19. T
4. T 8. F 12. F 16. F 20. F
TM 33
1. Contributed capital 11. Deficit
2. Share Capital 12. Book value per share
3. Share premium 13. Unappropriated Retained Earnings
4. Liquidating dividend 14. Retained Earnings
5. Scrip dividend 15. Participating Preference Share Capital
6. Dividends 16. Paid-in Capital from Stock Dividend
7. Appropriated Retained Earnings 17. Carrying value
8. Property dividend 18. Stock Dividend Distributable
9. Small share capital dividend 19. Stock Dividend
10 Dividends in arrears 20. Earnings per share
.

TM 34
1. A 6. C 11. C 16. A 21 D
 .
2. B 7. A 12. C 17. C 22 B
.
3. D 8. A 13. D 18. B 23 A
.
4. D 9. D 14. D 19. C 24 B
.
5. B 10. A 15. D 20. A 25 D
.

TM 35
1. C ABC – P5.00; DEF – P12.00
2. D P252,000 + P116,550 + P118,420 + P116,000 + P12,000 = P614,970
3. B P614,970 + P38,390 = P653,360
4. B 400 sh x P50 x 6% = P1,200
5. A PS = P48,000; CS – P180,000 – P48,000 = P132,000
6. A PS = P48,000 / 6,000 = P8.00; CS = P132,000 /12,000 = P11.00
7. B P801,400 – P601,100 = P200,300
8. B 60,000 x 40% x P20 = P480,000
9. C P20 x 40%
10. D

TM 36
1. P1,500,000 75,000 sh x P20
2. P750,000 75,000 sh x P10
3. P2,250,000 P1,500,000 + P750,000
4. P150,000 P500,000 – P350,000
5. P2,400,000 P2,250,000 + P150,000
6. P32 P2,400,000/75,000
7. P4.67 P350,000/75,000
8. P6.67 P500,000/75,000
TM 37
1. P4.00 P50 x 8%
2. P24,450,000 P450,000 + P16,000,000 + P8,000,000
3. 9,000 sh P450,000 / P50
4. 1,600,000 sh P16,000,000 / P10
5. P72,000 P450,000 x 8% x 2 years
6. P68 LV + Div. in arrears = P60 + (P4 x 2 years) = P68
7. P16.67 [P21,450,000 – (9,000 x 68)]/ 1,600,000 sh

TM 38
Year Share
capital Case1 Case 2 Case 3 Case 4

2005 Preference P114,286 P114,286 P 60,000 P 60,000

Ordinary 285,714 285,714 340,000 340,000

2006 Preference P 64,286 P64,286 P60,000 P60,000

Ordinary 160,714 160,714 165,000 165,000

2007 Preference P37,500 P37,500 P37,500 P37,500

Ordinary --------- --------- ----------- ----------

2008 Preference P75,000 P60,000 P75,000 P60,000

Ordinary --------- 15,000 ---------- 15,000

2009 Preference P 91,071 P 85,714 P 67,500 P 60,000

Ordinary 208,929 214,286 232,500 240,000

CHAPTER 10

TM 39
1. T 6. T 11. T 16. F
2. T 7. T 12. T 17. F
3. F 8. T 13. F 18. T
4. F 9. F 14. F 19. T
5. F 10. T 15. T 20. F

TM 40
1. Treasury shares
2. Convertible preference shares
3. Stock or share split / share split-up
4. Recapitalization
5. Paid-in Capital from Retirement of Share Capital
6. Cost method
7. Share split down / reverse share split
8. Retained Earnings
9. Decrease
10. Retained Appropriated for Treasury shares
 11. Memorandum entry
12. Selling price
13. Contributed Capital
14. Reacquisition by donation
15. Retirement of share capital

TM 41
1. D
2, C
3. D
4. A
5. B
6. A
7. D
8. C
9. C
10. D
11. A 6,000 x P20 = P120,000 (same as before the Share Capital split)
12. D
13. C 20,000 x P30 = P600,000
14. B
15. B Authorized - 10,000; Issued - 4,400; Outstanding - 4,400 - 500 = 3,900
16. A Authorized - 10,000 x 2 = 20,000; Issued - (4,400 + 100) x 2 = 9,000;
Outstanding - (4,400 - 500 + 100) x 2 = 8,000
17. A P1,650,000 - (1,000 shares x P40) = P1,610,000
18. C 100,000 shares x P30 = P3,000,000
19. B (100,000 sh x P50) + (5,000 sh x P20) - (15,000 sh x P15) = P4,875,000
20. B 100,000 shares x 3 - 300,000 shares - 15,000 shares = 285,000 shares

TM 42
Problem A:
Outstanding Ordinary Add'l Paid-In Retained
Shares Share Capital Capital Earnings TSE
1. 230,000 P 4,600,000 P1,350,000 P4,650,000 P10,600,000
2. 400,000 4,000,000 1,200,000 5,400,000 10,600,000
3. 400,000 8,000,000 1,200,000 1,400,000 10,600,000
4. 200,000 3,000,000 2,200,000 5,400,000 10,600,000
5. 195,000 3,900,000 1,180,000 5,400,000 10,480,000

TM 43
a. Preference Share Capital (500 sh x P100) 50,000
Preference Share Premium (500 sh x P20) 10,000
Paid-In Capital from Retirement of PSC 2,500
Cash (500 sh x P115) 57,500

PSC 3,500 shs OSC 10,000 shs

b. Treasury Shares (1,000 sh x P25) 25,000
Cash 25,000

Cash 28,000
Treasury Shares 25,000
Paid-In Capital from Sale of Treasury Shares 3,000

PSC 4,000 shs OSC 10,000shs

c. Preference Share Capital (1,000 sh x P100) 100,000

Preference Share Premium (1,000 sh x P20) 20,000
Ordinary Share Capital (1,000 sh x 4 x P20) 80,000
PIC from Conversion of PSC into OSC 40,000

PSC 3,000 shs OSC 14,000 shs

d. Ordinary Share Capital, P20 par 200,000

Ordinary Share Capital, P5 par 200,000
PSC 4,000 shs OSC 40,000 shs