Execise 1

a alce
b andaya

Exercise 2

a areja

Exercise 3

a ampis

Talisay Corporation
Statement of Financial Position
December 31, 2017

Assets

Current Asset P34,000

Noncurrent Asset
Land 9,000
Other Fixed Asset (Net of Accumulated Depreciation)
(16,000 from reserve for depreciation; 56,000-16,000) 40,000
Total Assets

Liabilities and Stockholders’ Equity

Current Liabilities P20,000
Long-term liabilities 8,000
Total Liabilities P28,000
Stockholders’ Equity
10% Preference shares (P10 par value; 1,000
shares authorized, issued and outstanding) 10,000
Ordinary shares (P2 par value; 4500 shares authorized
[ordinary shares + shares subscribed],4,000 shares issued,
and 3,250 outstanding) 8,000
Ordinary shares subscribed (500 shares) 1,000
Share Premium (preference) 2,000
Share Premium (ordinary) 20,250
Donated capital 9,000
Retained earnings 19,750
Less: Treasury shares (750 shares at cost) (15,000)
Total Liabilities and Shareholder’s Equity P83,000
Exercise 4

a ablay
B alce
(b)
Ordinary Shares Schedule
# of Shares Amount
Balance 9/30/06 110,000 P1,100,000
T. Santos 4,500 45,000
Balance 9/30/07 114,500 P1,145,000

C andaya
d areja

Exercise 5

A ampis
Baguio Company
Shareholder’s Equity
December 31, 20x7

Ordinary shares (15 par value; 100,000 shares authorized,

and outstanding) P1,500,000
Paid-in capital in excess of par 2,425,000
Retained earnings (from Dec. 31, 2007) -0-
P3,925,000
Exercise 6

A ablay

Retained Earnings before adjustments P 131,000

Add (Deduct) Adjustments:

(a) Premium on share capital credited

to retained earnings (P 15,000)

(b) Gain on sale of treasury shares

incorrectly charged ( 10,000)

(c) Appraisal increase of land incorrectly

credited to Retained Earnings ( 30,000)

Total adjustments (P 55,000)

Retained Earnings after adjustments P

76,000

Exercise 7

A alce
B andaya

Exercise 8

A areja

Problem 1

A Ampis

Del-V Company
Statement of Retained Earnings
For the Year Ended December 31, 20x7
Retained Earnings Beg. P206,000
Add: Net Income 58,000

Less:
Treasury Shares (cost) (14,000)
Share Dividends declared &
Distributed (6,000)
Cash Dividends declared &
Distributed (9,000)
Recalled and Retired preferred
Stock (40,000)
Previous year error correction (12, 600)
Retained Earnings, End P182,400

B ablay

Note I:

Treasury stock account is debited as it is being acquired through retained earnings and
retained earnings account is credited.

Date Accounts and explanation Debit Credit

Retained earnings P14,000

Treasury stock P14,000

Being treasury stock is acquired

Note II:
Retained earnings account is debited as it is being received from cash dividend and
stock dividend, as these accounts were credited.

Date Accounts and explanation Debit Credit

Retained earning P15,000

Cash dividend P9,000

Stock dividend 6,000

Noted III:

Retained earnings account is debited as it is being distributed through capital account.

Date Accounts and explanation Debit Credit

Retained earnings P300,000

Capital P300,000

Being retained earnings is paid

through capital account.

Capital account is debited as it bis being adjusted through retained earnings and
retained earning account is being credited.

Date Accounts and explanation Debit Credit

Capital P260,000

Retained earning a/c P260,000

 Being capital account is adjusted
through retained earnings.

Note IV:

Retained earnings are debited as it is distributed to the shareholders and net income
account is credited.

Date Accounts and explanation Debit Credit

Retained earnings P18,000

Net income P18,000

Income tax account is debited as it is an expense paid through retained earnings and
retained earning account is credited.

Date Accounts and explanation Debit Credit

Income tax P5,400

Retained earnings P5,400

Being income tax is paid through

retained earnings.

Problem 2

A alce
B andaya

Problem 3

1.A areja
1.B ampis
2,000 shares * 100 par = 200,000
200,000 * 10% = 20,000
20,000* 2 years in arrears = 40,000
40,000 + 20,000 current = 60,000

1.C ablay

Dividends in arrears (1 x 2,000 x P20,000

0.10 x P100)

Current preferred dividends 20,000

Ordinary proportional share (0.10 x P30,000

30,000 x P10)

Remainder shared * (P80,000 – 4,000 6,000

P70,000)

Total P44,000 P36,000

*Preference 10,000 extra dividend X (2,000 X

P100)/(2,000 X P100) + (30,000 X P10) =
P4,000

*Ordinary 10,000 extra dividend X (P300,000/P500,000)

= P6,000
1. D alce

2 andaya

Problem 4

A areja

Problem 5

A ampis
Capital Stock
Preferred Stock P500,000
Common Stock 350,000
Total Capital Stock 850,000
Share Premium:
In excess of Par- Preferred 65,000
In excess of Par- Common 61,000
From Treasury Stock-Preferred 4700 130, 700
Total Paid in Capital P 980,700

Retained Earnings 297, 400

Total Paid in Capital & Retained Earnings 1,278,100
Less: Treasury shares 19,800
Total Shareholders Equity P 1,258,300

Problem 6

A ablay
A) Journal entry should be made at the time of the issuance of the bonds and
warrants.

PARTICULARS DEBIT CREDIT

CASH P150,000

DISCOUNT ON BONDS PAYABLE(175K- 47,500

127.5K)

BONDS PAYABLE P175,000

 PAID IN CAPITAL- STOCK WARRANTS 22,500

B alce

Problem 7

A andaya

B areja

Problem 8

A ampis
April 30 Paid in Capital in Excess of stated Value 32,000
Printing Expense 2,500
Legal Fees 17, 350
Accounting Fees 12, 000
SEC Fees 150
To assign costs to Paid-in Capital account.

April 30 Provision for Income Taxes 17, 600

Income Taxes Payable 17, 600
To record income taxes payable.

April 30 Retained Earnings 35, 500

Capital Stock 50,000
Paid in Capital in excess of stated value 38,000
Stock dividend to be issued 47,500
To correct the amount of declared dividend.
B ablay

STOCKHOLDERS' EQUITY

Issued 10,000 shares ( 500 in treasury) P500,000

Stock dividend 47,500

Paid in capital in excess of stated value 258,500

Retained earnings 728,900

P1,534,900

Less: Cost of treasury stock 40,000

Total Stockholder's Equity' P1,494,900