Use the following information to answer next three (3) questions:

At the beginning of current year, Jejuwave Company reported the following shareholders’ equity:

Share capital, P10 par, outstanding 225,000 shares 2,250,000

Share premium 1,500,000
Retained earnings 2,000,000

During the current year, the entity had the following transactions:
 Acquired 10,000 treasury shares for P50 per share or P500,000.
 Sold 5,000 treasury shares at P60 a share.
 Sold 2,000 treasury shares at P45 per share.
 Net income for the year was P2,500,000.

1. What is the total amount of share premium at year – end?

a. 1,500,000
b. 1,560,000
c. 1,540,000
d. 2,550,000

Answer: C

2. What is the share capital at year – end?

a. 2,250,000
b. 2,150,000
c. 2,320,000
d. 2,300,000

Answer: A

3. What is the total shareholders’ equity at year – end?

a. 8,140,000
b. 8,300,000
c. 8,250,000
d. 8,290,000

Answer: A

Treasury shares 500,000

Cash 500,000

Cash (5,000 x 60) 300,000

Treasury shares (5,000 x 50) 250,000
Share premium — treasury 50,000

Cash (2,000 x 45) 90,000

Share premium — treasury 10,000
Treasury shares (2,000 x 50) 100,000

Share premium — issuance January 1 1,500,000

Share premium — treasury (50,0 000 —
40,000
10,000)
Total share premium 1,540,000

Share capital 2,250,000

The share capital issued is not affected by the acquisition and sale of treasury shares.

Share capital 2,250,000

Share premium 1,540,000
Retained earnings 4,500,000
 Treasury shares (3,000 shares remaining x
(150,000)
50)
Total shareholders’ equity 8,140,000

Retained earnings — beginning 2,000,000

Net income for the year 2,500,000
Retained earnings— ending 4,500,000

4. Gyeongbok Enterprises issued 60,000, P50 par value, ordinary shares and 20,000, P100 par value, preference shares
for a total consideration of P7,500,000. At this date, the ordinary share was selling for P100 per share and the
preference share was selling for P150 per share. What amount of the proceeds should be allocated to the preference
shares?
a. P2,000,000 c. P1,875,000
b. P2,500,000 d. P5,000,000

Answer: B

No. of shares Fair value Total Amount

60,000 ordinary P100 P6 million
20,000 preference 150 3 million
Total 9 million

P7,500,000 x 3/9 = P2,500,000.

5. What amount should be allocated to ordinary shares?

a. P2,000,000 c. P1,875,000
b. P2,500,000 d. P5,000,000
P7,500,000 x 6/9 = P5,000,000.

The “stockholders’ equity” account of Miro Corporation, after its initial year of operation in 2022 shows the following:

Date Particulars Debit Credit

Jan. 1 Issued 6,000 shares at par of P100 in exchange for

real property with a market value of P800,000; authorized
20,000 shares
P600,000

Jan. 15 Sold 8,000 shares at P120 960,000

Mar. 10 Purchased 800 shares at P150 P120,000

May 15 Loss on sale of machinery 40,000

June 10 Sold 400 treasury shares 68,000

Dec. 31 Cash dividends declared payable January 15, 2023 80,000

Dec. 31 Net income for the year 316,000

QUESTIONS:

Based on the information presented above and the result of your examination, answer the following.

1. The adjusted common stock as of December 31, 2022 is

a. P1,360,000 b. P1,400,000 c. P1,560,000 d. P1,340,000

(600,000 + 800,000)

2. The APIC-excess over par as of December 31 2022 is

a. P360,000 b. P368,000 c. P160,000 d. P168,000

(200,000+160,000)

3. The unappropriated retained earnings as of December 31 2022 is

a. P196,000 b. P136,000 c. P156,000 d. P144,000

(316,000-40,000-80,000)
4. The adjusted balance of the stockholders’ equity section on December 31, 2022 is
a. P1,944,000 b. P1,744,000 c. P1,704,000 d. P1,904,000

osc 1400000

prem-osc 360000

sp ts 8000

re-unapp 136000

re approp 60000

ts (60000)

she 1,904,000