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7209 - Shareholders Equity

The document discusses shareholders' equity transactions for an entity over a year. It includes questions about calculating share capital, share premium, retained earnings, and total shareholders' equity based on information provided about share issuances, conversions, purchases, sales, retirements, splits and dividends paid out.

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197 views2 pages

7209 - Shareholders Equity

The document discusses shareholders' equity transactions for an entity over a year. It includes questions about calculating share capital, share premium, retained earnings, and total shareholders' equity based on information provided about share issuances, conversions, purchases, sales, retirements, splits and dividends paid out.

Uploaded by

jsmozol3434qc
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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CPA REVIEW SCHOOL OF THE PHILIPPINES

Manila
FINANCIAL ACCOUNTING AND REPORTING VALIX/VALIX/SANTOS
BATCH 94 OCTOBER 2023 CPALE
SHAREHOLDERS’ EQUITY
1. An entity reported the following shareholders’ equity at the beginning of the current year:
Share capital, P10 par 5,000,000
Share premium 2,000,000
Retained earnings 1,500,000
During the current year, the entity had the following share transactions:
\

• Acquired 20,000 treasury shares for P1,000,000 or P50 per share


• Sold 15,000 treasury shares at P60 per share.
• Sold the remaining treasury shares at P45 per share.
What amount should be reported as share premium at year-end?
a. 2,125,000
b. 2,150,000
c. 2,000,000
d. 1,975,000
2. At year-end, an entity canceled 5,000 shares of P50 par value held in treasury at an average cost of
P120 per share. Before recording the cancelation of the treasury shares, the entity had the following
shareholders’ equity:
Share capital, 50,000 shares originally issued at P75 2,500,000
Share premium 1,250,000
Retained earnings 1,000,000
Treasury shares, at cost 600,000
What amount should be reported as share premium outstanding at year-end?
a. 1,250,000
b. 1,125,000
c. 650,000
d. 900,000
3. At the beginning of current year, an entity had 125,000 issued ordinary shares and 25,000 treasury shares.
During the current year, transactions involving ordinary shares were:
Jun 1 13,000 shares of treasury were sold.
Nov 1 A 3 for 1 share split took effect.
Dec 1 4,000 ordinary shares were purchased to be held as treasury
1. At year-end, how many ordinary shares were issued?
a. 375,000
b. 325,000
c. 414,000
d. 495,000
2. At year-end, how many shares are outstanding?
a. 335,000
b. 225,000
c. 325,000
d. 359,000
4. During the year, an entity issued for P110 per share, 15,000 convertible preference shares of P100 par
value. One preference share may be converted into three ordinary shares of P25 par value at the option
of the preference shareholder.
At the year-end, all of the preference shares were converted into ordinary shares. The market value of the
ordinary share at the conversion date was P40.
What amount should be credited to share premium as a result of conversion?
a. 375,000
b. 525,000
c. 150,000
d. 0
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5. During the current year, the entity had the following transactions affecting shareholders’ equity:
Number of shares Price per share
Issue of preference shares 10,000 150
Retirement of preference shares 5,000 190
Purchase of treasury ordinary shares 5,000 80
Share split, par value reduced to P5 2 for 1
Reissue of treasury ordinary shares 5,000 50
At the beginning of current year, the shareholders’ equity comprised the following:
Preference share capital P100 par, 30,000 shares, 10% 3,000,000
Ordinary share capital, 100,000 shares, P10 par 1,000,000
Preference share premium 1,200,000
Ordinary share premium 4,000,000
Retained earnings 5,000,000
At year-end, dividends were paid an ordinary shares at P10 per share and on the preference shares at the
10% preference rate. Net income for the year was P4,000,000.
1. What amount should be reported as ordinary share capital at year-end?
a. 5,000,000
b. 1,000,000
c. 2,500,000
d. 2,000,000
2. What amount should be reported as preference share capital at year-end?
a. 3,500,000
b. 3,600,000
c. 3,400,000
d. 3,300,000
3. What amount should be reported as share premium at year-end?
a. 5,550,000
b. 5,300,000
c. 5,500,000
d. 5,700,000
4. What amount should be reported as retained earnings at year-end?
a. 6,700,000
b. 6,450,000
c. 6,500,000
d. 6,400,000
5. What amount should be reported as total shareholders’ equity at year-end?
a. 16,300,000
b. 16,250,000
c. 16,100,000
d. 16,500,000

End

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