Shareholders’ Equity-Contributed Capital or Paid In Capital

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Problem. The following data were compiled prior to Sept. 20 - Sold 500 treasury shares at P29 per share.
preparing the statement of financial position of the Dec. 1 - Collected the balance due on July 1
Conviction Corporation. subscriptions and issued the shares.
Authorized share capital, P100 par value P4,000,000 Total contributed capital for December 31, 2010 is
Cash dividends payable 160,000 a. P615,000 c. P613,500
Donated capital 800,000 b. P818,000 d. P816,500
Gain on sale of treasury shares 80,000
Net unrealized loss on available for sale 96,000 4. The following balances are shown in the shareholders'
securities equity of tamarind company on December 31, 2009:
Premium on share capital 320,000 Preference share capital, P10 par,
Premium on bonds payable 240,000 100,000 shares P1,000,000
Reserve for bond sinking fund 400,000 Ordinary share capital, P10 par,
Reserve for depreciation 600,000 500,000 shares, 5,000,000
Revaluation increment on property 800,000 Share premium - preference 50,000
Retained earnings, unappropriated 720,000 Share premium – ordinary 200,000
Subscribe share capital 480,000 Retained earnings 100,000
Subscriptions receivables 120,000
Share warrants outstanding 200,000 During 2010, the following transactions pertaining to
Treasury shares, at cost 144,000 the shareholders' equity were completed:
Unissued share capital 800,000  Retirement of 5,000 preference shares at P11 per
share.
REQUIRED:  Purchase of 5,000 ordinary shares at P12 per
share.
Compute for the following:  Share split, ordinary, 2 for 1.
1. Total share premium P1,400,000  Reissue of 2,000 treasury shares at P8 per share.
2. Contributed capital P4,960,000  Profit for 2010, P300,000.
3. Appropriated retained earnings P544,000 The total shareholders' equity on December 31, 2010 is
4. Total shareholders’ equity P6,640,000 a. P6,556,000 c. P6,350,000
b. P6,551,000 d. P6,251,000
5. Legal capital P3,680,000
5. The December 31, 2009 condensed balance sheet of
Ambani Services, an individual proprietorship, follows:
MULTIPLE CHOICE PROBLEMS
Current assets P140,000
1. Dayron Co. had 8,000 ordinary shares outstanding in Equipment (net) 130,000
January 2010. The company distributed a 15% share P270,000
dividend in March and a 10% share dividend in June Liabilities P 70,000
2010. After acquiring 1,000 treasury shares in July 1, Mukesh Ambani, Capital 200,000
the company split its shares 4 for 1 in December 2010. P270,000
How many ordinary shares are outstanding as of
December 31, 2010? Fair values at December 31, 2009 are as follows:
a. 36,480 c. 49,800 Current assets P160,000
b. 48,800 d. 35,480 Equipment 210,000
Liabilities 70,000
2. Helu Corporation was organized on January 1, 2010,
with an authorization of 1,000,000 ordinary shares with On January 2, 2010, Ambani Services was incorporated
a par value of P5 per share. with 5,000, P10 par value, ordinary shares issued. How
much should be credited to share premium?
During 2010, the corporation had the following equity a. P320,000 c. P230,000
transactions: b. P250,000 d. P200,000
Jan. 4 - Issued 200,000 shares @ P5 per share.
April 8 - Issued 100,000 shares @ P7 per share. 6. On December 1, 2010, Gates Corp. received a donation
June 9 - Issued 30,000 shares @ P10 per share of 2,000 shares of its P5 par value ordinary shares from
July 29 - Purchased 50,000 shares @ P4 per share. a shareholder. On that date, the share’s fair value was
Dec. 31 - Sold 50,000 shares held in treasury @ P8 P35 per share. The share was originally issued for P25
per share. per share. By what amount would this donation cause
total shareholders’ equity to decrease?
What should be the total Share Premium as of a. P70,000 c. P20,000
December 31, 2010? b. P50,000 d. P 0
a. P400,000 c. P500,000
b. P450,000 d. P550,000 Use the following information for the next two questions.
RPCPA 1095
3. The N Corporation is authorized to issue 100,000 On March 1, 2010, Mall Company issued 60,000, P50 par
ordinary shares, P17 par value. At the beginning of value, ordinary shares and 20,000, P100 par value,
2010, 18,000 ordinary shares were issued and preference shares for a total consideration of P7,500,000.
outstanding. These shares had been issued at P24. At this date, the ordinary share was selling for P100 per
During 2010, the company entered into the following share and the preference share was selling for P150 per
transactions: share.
Jan. 16 - Issued 1,300 ordinary shares at P25 per share. 7. What amount of the proceeds should be allocated to
Mar. 21 - Exchanged 12,000 ordinary shares for a the preference shares?
building. The ordinary shares were selling at a. P2,000,000 c. P1,875,000
P27 per share. b. P2,500,000 d. P3,000,000
May 7 - Reacquired 500 ordinary shares at P26 per
share to be held in treasury. 8. What amount of the proceeds should be allocated to
July 1 - Accepted subscriptions to 1,000 ordinary the preference shares, if the shares are redeemable at
shares at P28 per share. The contract called the option of the holder after 5 years?
for 10% down payment with the balance due a. P2,000,000 c. P1,875,000
on December 1. b. P2,500,000 d. P3,000,000
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 market value of the warrant after the preference
9. On December 31, 2010, Palau Company issued shares were issued was P15. The warrants expire on
200,000 shares of P100 par, 10% cumulative December 31, 2011. The proceeds to be allocated to
preference shares for P25,000,000. One detachable the preference shares on December 31, 2010 is
warrant was attached to each preference share issued. a. P25,000,000 c. P21,000,000
Each warrant gives the holder the right to purchase b. P22,000,000 d. P20,000,000
one ordinary share, P50 par value, for P100. The
10. The equity section of Buffett Company revealed the Retained earnings 360,000
following information on December 31, 2010:
During the year ending December 31, 2010, the
Preference share capital, P100 par P5,000,000 following summarizes the transactions affecting the
Share premium-preference shares 2,000,000 shareholders’ equity
Ordinary share capital, P50 3,200,000
Share premium-ordinary shares 500,000 April 30 - 1,000 preference shares were retired at P25
Subscribed ordinary share capital 800,000 per share.
Retained earnings-appropriated 250,000 June 15 - 2,000 treasury shares, ordinary, were
Unrealized loss on available for sale purchased at P85 per share
securities 600,000 June 30 - A two-for-one ordinary share split was
Subscription receivable-ordinary declared.
shares 400,000 July 31 - 800 treasury shares were reissued at P50 per
Retained earnings- unappropriated 3,500,000 share.
Treasury shares-ordinary 1,000,000 Dec. 31 – Profit for 2010 was P300,000.

How much is the contributed capital of Buffett What was the total share premium on December 31,
Company as of December 31, 2010? 2010?
a. P10,100,000 c. P11,100,000 a. P760,000 c. P755,000
b. P11,500,000 d. P10,500,000 b. P766,000 d. P761,000

11. On July 1, 2009, the Beauty Corporation was 14. Anil Company was organized on January 1, 2008.
registered with the SEC. Its authorized share On that date it issued 500,000, P10 par value, ordinary
capital consists of 100,000 ordinary shares with par shares at P15 per share. During the period January 1,
value P20.00 per share. 2008 through December 31, 2010, Anil reported profit
of P3,000,000 and paid cash dividends of P500,000.
On July 15, 2009, it issued 10,000 shares at P23 per On January 5, 2010, Anil purchased 50,000 ordinary
share. On October 15, 2009, the Beauty Corp. paid to shares at P20 per share. On December 31, 2010,
the majority shareholder the sum of P80,000 for a 45,000 treasury shares were sold at P30 per share and
certain parcel of land; and issued 5,000 ordinary shares retired the remaining treasury shares. What is the total
for the building on the land. The land was appraised at shareholders’ equity on December 31, 2010?
P130,000. The building has a cost of P150,000 and its a. P10,350,000 c. P10,250,000
depreciated value is P90,000. It was appraised at b. P10,850,000 d. P10,500,000
P120,000.
On April 15, 2010, the corporation purchased 5,000 of 15. Pudtol Corporation was organized on January 3,
its own ordinary shares for P100,000. On June 15, 2010. Pudtol was authorized to issue 50,000 ordinary
2010, 2,000 of the treasury shares were sold at P24 per shares with a par value of P10 per share. On January 4,
share. Pudtol issued 30,000 ordinary shares at P25 per share.
On July 15, Pudtol issued an additional 10,000 shares
How much is the total share premium of Beauty Corp. at P20 per share. Pudtol reported income of P33,000
on June 30, 2010? during 2010. In addition, Pudtol declared a dividend of
a. P108,000 c. P 58,000 P.50 per share on December 31, 2010. The amount
b. P 88,000 d. P100,000 reported on Pudtol Corporation's December 31, 2010,
RPCPA 1087 balance sheet as shareholders' equity was
12. ATC Company issued all of its outstanding shares a. P400,000 c. P550,000
for P150 in 2008. On January 10, 2009, ATC acquired b. P950,000 d. P963,000
100,000 treasury shares at P120 per share. ATC
reissued 50,000 treasury shares for P7,500,000 on June 16. Tekka Corporation was incorporated on June 1,
30, 2010 and retired the rest on December 31, 2010. 2010 with an authorized 200,000, no-par, ordinary
ATC’s equity accounts as at December 31, 2009 follow: shares, stated value P10 and 10,000, 9% par value
Share capital, P100 par value P150,000,000 P30, preference shares. Transactions affecting
Share premium 75,000,000 company’s equity as of July 31, 2010 were as follows:
Retained earnings 25,000,000 June 1 50,000 ordinary shares were issued at
Total P250,000,000 P10.
June 5 Assets with a total appraised value of
What shall be the balance of share capital account on
P600,000 were acquired in exchange for
December 31, 2010?
50,000 ordinary shares.
a. P140,000,000 c. P145,000,000
June 15 Subscriptions were received for 100,000
b. P144,000,000 d. P150,000,000
ordinary shares at P15 and for 5,000
preference shares at P35.
13. The capital accounts of Kamprad, Inc. on December
June 25 Payments in full for the ordinary and
31, 2009, were as follows:
preference shares subscribed June 15
Preference share capital, were received and the corresponding
20,000 shares, P20 par P 400,000 shares were issued.
Share premium - preference 160,000
Ordinary share capital, The total shareholders’ equity as of July 31, 2010 is
50,000 shares, P80 par 4,000,000 a. P2,875,000 c. P2,750,000
Share premium – ordinary 600,000 b. P2,300,000 d. P2,775,000

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 RPCPA 1086

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