Instruction: at The End of Each Case, You Are Required To Answer Each Requirement

Instruction: At the end of each case, you are required to answer each requirement.
Support your answers with entries and solution. Do this by group (3 in a

group). Answers must be written in a 1 whole sheet of paper and must
be submitted today in the faculty office.
Resolve Corporation began operation on January 1, 2006. The company was

authorized to issue 60,000 share of P10 par value common stock and 120,000 shares of
10% P100 par value convertible preferred stock.
In correction with your audit of the company’s financial statements, your noted the
following transactions involving stockholders’ equity during 2006:
Jan. 1 Issued 1,500 shares of common stock to the corporation

promoters in exchange for property valued at P510, 000 and
services valued at P210,00. The property costs P270,00 3 years
ago and was carried on the promoters’ books at P150,000.
Jan. 31 Issued 30,000 shares of convertible preferred stock at P150 per

share. Each share can be converted to five shares of common
stock. The corporation paid P225,000 to an agent for selling the
shares.
Feb. 15 Sold 9,000 shares of common stock at P390 per share. The
corporation paid issue costs of P75,000.
May 30 Received subscriptions for 12,000 shares of common stock at

P450 per share.
Aug. 30 Issued 2,100 share of common stock and 4,200 shares of

preferred stock in exchange for a building with a fair market
value of P1,530,000. The building was originally purchased for
P1,140,000 by the investors and has a book value of P660,000.
In addition, 1,800 shares of common stock were sold for
P720,000 cash.
Nov. 15 Payments in full for half of the subscriptions and partial

payments for the rest of the subscriptions were received. Total
cash received was P4,200,000. Shares of stock were issued for
the fully paid subscriptions.
Dec. 1 Declared a cash dividend of P10 per share on preferred stock,

payable on December 31 to stockholders of record on December
15, and 20 per share cash dividend on common stock, payable
on January 15, 2007 to stockholders of record on December 15.
Dec. 31 Paid the preferred stock dividend.
Net income for the first year of operation was P1,800,000.
QUESTIONS:
Based on the above and the result of your evaluation, determine the following as of
December 31, 2006:
1. Common stock
a. P264,000 b. P144,000 c. P204,000 d. P186,000
2. Paid-in capital in excess of par value of preferred stock

a. P1,500,000 b. P1,275,00 c. P1,545,000 d. P1,860,000
3. Paid-in capital in excess of par value of common stock

a. P8,211,000 b. P11,121,000 c. P10,851,000 d. P10,032,000
4. Retained earnings
a. P1,050,000 b. P1,170,000 c. P1,458,000 d. P930,000
5. Total stockholders’ equity

a. P17,295,000 b. P15,810,000 c. P16,950,000 d. P17,010,000
Perseverance Corporation was authorized at the beginning of 2004 with 300,000

authorized shares of P100, par value common stock. At December 31, 2004, the
stockholders’ equity section of Perseverance was as follows:
Common stock, par value P100 per share; authorized

300,000 share; issued 30,000 shares P3,000,000
Additional paid-in capital 300,000
Retained earnings 450,000
Total stockholders’ equity P3,750,000
On June 15, 2005, Perseverance issued 50,000 shares of its common stock for
P6,000,000. A 5% stock dividend was declared on September 30, 2005 and issued on
November 10, 2005 to stockholders of record on October 31, 2005. Market value of
common stock was P110 per share on declaration date. The net income of
Perseverance for the year ended December 31, 2005 was P475,000.
During 2006, Perseverance had following transaction;
March 1 Perseverance reacquired 3,000 shares of its common stock for

95 per share.
May 31 Perseverance sold 1,500 shares of its treasury stock for P120
per share.
August 10 Issued to stockholders one stock right for each share held to
purchase two additional shares of common stock for P125 per
share of common stock for P125 per share. The rights expire
on December 31, 2006.
September 15 25,000 stock rights were exercised when the market value of
common stock was P130 per share.
October 31 40,000 stock rights were exercised when the market value of
the common stock was P140 per share.
December 10 Perseverance declared a cash dividend of P2 per share payable

on January 5, 2007 to stockholders of record on December 31,
2006.
December 20 Perseverance retired 1,000 shares of its treasury stock and

reverted them to an unused basis. On this date, the market
value of the common stock was P150 per share.
December 31 Net income for 2006 was P500,000.
QUESTIONS:
Based on the above and the result of your audit, determine the following as of
December 31, 2006:
1) Common stock
a. P21,500,000 b. P21,300,000 c. P14,800,000 d. P21,250,000
2) Additional paid-in capital

a. P4,627,500 b. P3,007,500 c. P4,632,500 d. P4,592,500
3) Retained stock
a. P600,000 b. P565,000 c. P557,000 d. P560,000
4) Treasury stock
a. P10,000 b. P47,500 c. P50,000 d. P0

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Instruction: At the end of each case, you are required to answer each requirement.

Support your answers with entries and solution. Do this by group (3 in a

Resolve Corporation began operation on January 1, 2006. The company was

Jan. 1 Issued 1,500 shares of common stock to the corporation

Jan. 31 Issued 30,000 shares of convertible preferred stock at P150 per

May 30 Received subscriptions for 12,000 shares of common stock at

Aug. 30 Issued 2,100 share of common stock and 4,200 shares of

Nov. 15 Payments in full for half of the subscriptions and partial

Dec. 1 Declared a cash dividend of P10 per share on preferred stock,

Net income for the first year of operation was P1,800,000.

2. Paid-in capital in excess of par value of preferred stock

3. Paid-in capital in excess of par value of common stock

5. Total stockholders’ equity

Perseverance Corporation was authorized at the beginning of 2004 with 300,000

Common stock, par value P100 per share; authorized

During 2006, Perseverance had following transaction;

March 1 Perseverance reacquired 3,000 shares of its common stock for

December 10 Perseverance declared a cash dividend of P2 per share payable

December 20 Perseverance retired 1,000 shares of its treasury stock and

December 31 Net income for 2006 was P500,000.

2) Additional paid-in capital

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