I. Kaya Ko Ito Ltd.

reported the following shareholder’s equity at December 31, 2022:

Cumulative preference share capital – 12%, P50 par, 20,000 shares 1,000,000 Ordinary share capital, P25
par, 100,000 shares 2,500,000
Share premium 200,000
Retained earnings – unappropriated 400,000 Retained
earnings – appropriated 100,000
Revaluation surplus 300,000

Dividends on preference shares have not been paid for three years. The preference share has a liquidating value of P55 and a
call price of P68.

1. What is the book value per preference share?

II. Tama Ako Dito Ltd. declared a dividend in a form of a formal unconditional promise, made under seal, with a face
amount of P1,500,000 on December 31, 2022. The instrument is available to be sold in the market at P1,700,000.
Moreover, in the face of the instrument, the stated rate is equivalent to 15% interest payable annually which will mature
three (3) years after its issuance.

2. How much is the increase (decrease) in the retained earnings of Tama Ako Dito Ltd. on December 31, 2024?

III. The shareholders’ equity of Papasa Ako, Inc. shows the following balances on December 31, 2022:

10% Preference share, cumulative and non-participating, P100 par

with a liquidation value of P110, 20,000 shares 2,000,000 Ordinary
share, P100 par, 30,000 shares 3,000,000 Subscribed
ordinary shares 1,000,000
Subscription receivable 600,000
Treasury share, 5,000 ordinary shares, at cost 400,000
Share premium 660,000
Accumulated profits and losses 1,580,000

2. What is the book value per share of ordinary shares, assuming preference dividends are in arrears from 2020?

IV. During 2021, May Himala Corp. issued 10,000 shares of P100 par value convertible preference share for P110 per
share. One preference share can be converted into 3 shares of May Himala Corp. P25 par ordinary shares at the option
of the preference shareholder. On December 31, 2022, when the market value of the ordinary share was P40, the entire
preference share was converted.

2. How much should be credited to Share Premium account as a result of the conversion?

V. Wag Susuko, Inc. has the following equity balances on July 31, 2022:

Ordinary share, P10 par 3,000,000

Share premium 600,000
Accumulated profits and losses 200,000

On August 1, 2022, Wag Susuko, Inc. issued rights to shareholders to subscribe to additional share of its ordinary share.
A shareholder can buy one new share for every 10 rights plus P20 cash. The rights will expire on October 1, 2022. On
August 31, 2022, the market price of a share with the right attached was P40, while the market price of the right alone
was P4.

2. How much is the effect on the shareholders’ equity as a result of the issuance of share rights?
3. How much is the increase (decrease) in the share premium account assuming all rights will be exercised?
4. How much is the increase (decrease) in the retained earnings of Wag Susuko, Inc. on October 1, 2022 assuming all
rights were not exercised by the shareholders?

VI. Easy Lang Company had sufficient Accumulated Profits and Losses in 2022 as a basis for dividends but was
temporarily short of cash. Easy Lang Company declared a P1,000,000 dividends on July 1, 2022 and issued promissory
notes to its shareholders in lieu of cash. The notes, which are dated July 1, 2022, had a maturity date of June 30, 2023
and a 10% interest rate.

2. How much is the increase (decrease) in the Accumulated Profits and Losses of Easy Lang Company to account for the
scrip dividends in favor of the shareholder?

VII. The following share dividends were declared and distributed by Let’s Party, Inc.:

% of Ordinary Market Value Par Value

 Shares Outstanding
10 P 225,000 P 150,000
25 600,000 450,000

2. How much should be debited to Accumulated Profits and Losses at the time of declaration of the share dividends?

VIII. The shareholders’ equity of Laban Lang Co. on January 1, 2022, is as follows:

Ordinary shares, P20 par, 60,000 shares authorized, 30,000 shares issued
and outstanding 600,000 Share premium 100,000
Accumulated profits 325,000

On June 1, 2022, Laban Lang CO. declared and issued 15% share dividends. The market value of the shares on June 1 is
P26 per share. No additional shares of ordinary were issued between January 1 and June 1, 2022.

2. How much is the total contributed capital after the declaration of the share dividends?

IX. On January 2, 2022, Pasado Iyan Ltd. declared a cash dividend of P600,000 to shareholders of record on January 15,
2022, and payable on March 15, 2022. The following data pertain to the financial position of Pasado Iyan Ltd. in 2021:

Net income for the year ended December 31, 2021 190,000 Share premium, December 31, 2021
675,000
Accumulated profits, December 31, 2021 425,000

2. How much are the liquidating dividends paid by Pasado Iyan Ltd.?

X. In January 2022, the company had 125,000 issued shares and 25,000 treasury shares. During the year, 23,000 treasury
shares were reissued. Right after the reissuance of the treasury shares, the company declared a 3-for-1 split. In
December 2022, additional 5,000 shares were purchased and placed in the treasury.

2. Determine the number of shares outstanding in December 2022.

XI. On October 1, 2022, a company declared to its shareholders a property dividend in the form of pieces of equipment
with a carrying amount of P960,000 (acquired on October 1, 2016 for P2,400,000). The dividends are for distribution
on January 31, 2023. The company provided the following estimate of the asset’s fair value:

October 1, 2022 P1,050,000

December 31, 2022 1,020,000 January 31,
2023 1,110,000

2. What amount will be reported in the statement of profit or loss for the year 2022?
3. What amount will be reported in the statement of profit or loss for the year 2023?

XII. On January 1, 2022, Bilib Ako Sa Iyo Co. issued mandatorily redeemable preference shares in exchange for cash equal
to the total par value of the shares of P5,000,000. No dividends are to be paid on these shares, but the shares must be
redeemed on January 1, 2024 for P6,050,000. The implicit interest rate is 10% which is compounded annually.

2. How much will be debited to redeemable preference share account in 2024?

3. How much cash will be allocated to the payment of interest in 2024?

XIII. On December 31, 2022, an entity declared dividends on ordinary shares payable on February 26, 2023. The entity
decided to give its shareholders a choice between a total cash dividend of P3,450,000 or a property dividend in the form
of a noncash asset from the machinery with an original cost of P3,250,000 acquired on June 30, 2022 with a useful of
10 years, and its fair value less cost to distribute is equivalent to P3,000,000. The entity estimated that 55% of the
shareholder shall take the option of the cash dividend and 45% shall elect the noncash asset.

2. How much is the increase (decrease) in the retained earnings in 2022?

3. How much is the increase (decrease) in the retained earnings in 2023?

XIV. Pasado Na Company reported share capital P3,000,000, 20,000 shares, P150 par, share premium P200,000, and
retained earnings P1,500,000.

2. Assuming a recapitalization is effected, each shareholder receiving 2 shares of new no-par with a stated value of P50 for
each share owned, how much is the increase (decrease) in the share premium – recapitalization account?
3. Assuming a recapitalization is effected, each shareholder receiving 1 share of new P100 par value for each share owned,
how much is the increase (decrease) in the share premium – recapitalization account?