CORPORATE ACCOUNTING (WITH CONFRAS AND PAS 1) Based on TOS

PART A. (CONFRAS-20%)
1. IFRS stands for:
a. International Federation of Reporting Services.
b. Independent Financial Reporting Standards.
c. International Financial Reporting Standards.
d. Integrated Financial Reporting Services.
2. The authoritative status of the Conceptual Framework for Financial Reporting is as
follows:
a. It is used when there is no standard or interpretation related to the reporting
issues under consideration.
b. It is not as authoritative as a standard but takes precedence over any
interpretation related to the reporting issue.
c. It takes precedence over all other authoritative literature.
d. It has no authoritative status.
3. The objective of financial reporting places most emphasis on:
a. Reporting to capital providers.
b. Reporting on stewardship.
c. Providing specific guidance related to specific needs.
d. Providing information to individuals who are experts in the field.
4. General-purpose financial statements are prepared primarily for:
a. Internal users.
b. Auditors.
c. External users.
d. Government regulators.
5. The official accounting standard setting body in the Philippines created under the
Philippine Accountancy act of 2004
a. Financial Reporting Standards Council
b. Accounting Standards Council
c. Philippine Intepretations Committee
d. Board of Accountancy
6. Quality of information that permits users to identify similarities in and differences
between two sets of economic phenomena.
a. Relevance
b. Comparability
c. Faithful representation
d. Completeness
7. Having information available to users before it loses its capacity to influence
decisions
a. Predictive Value
b. Confirmatory Value
c. Timeliness
d. Completeness
8. Information about an economic phenomenon that has value as an input to the
processes used by capital providers to form their own expectations about the future.
a. Predictive value
b. Confirmatory value
c. Neutrality
d. Relevance
9. Information that is capable of making a difference in the decisions of users in their
capacity as capital providers.
a. Faithful representation
b. Relevance
c. Neutrality
d. Completeness

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 10. Quality of information that assures users that information represents the economic
phenomena that it purports to represent.
a. Faithful representation
b. Relevance
c. Neutrality
d. Free from error
11. Includes all the information that is necessary for a faithful representation of the
economic phenomena that it purports to represent
a. Faithful representation
b. Free from error
c. Neutrality
d. Completeness
12. Quality of information that allows users to comprehend its meaning.
a. Completeness
b. Understandability
c. Relevance
d. Free from error

PART B (PAS 1: PRESENTATION OF FINANCIAL STATEMENTS-40%)

13. An entity shall classify an asset as current under all of the following conditions,
except
a. The entity expects to realize the asset or intends to sell or consume it within
the entity's normal operating cycle.
b. The entity holds the asset for the purpose of trading.
c. The entity expects to realize the asset within twelve months after the
reporting period.
d. The asset is cash or a cash equivalent that is restricted to settle a liability for
more than twelve months after the reporting period.
14. An entity shall classify a liability as current when under all of the following
conditions, except
a. The entity expects to settle the liability within the entity's normal operating
cycle.
b. The entity holds the liability primarily for the purpose of trading.
c. The liability is due to be settled within twelve months after the reporting
period.
d. The entity has an unconditional right to defer settlement of the liability for at
least twelve months after the reporting period.
15. A financial liability due within twelve months after the reporting period shall be
classified as noncurrent
a. When it is refinanced on a long-term basis before the issue of financial
statements.
b. When the entity has no discretion to refinance for at least twelve months.
c. When it is refinanced on a long-term basis after the end of reporting period.
d. When it is refinanced on a long-term basis on or before the end of reporting
period.
16. When an entity breaches under a long-term loan agreement on or before the end of
the reporting period with the effect that the liability becomes payable on demand,
the liability is classified as
a. Current under all circumstances
b. Noncurrent under all circumstanæs
c. Current if the lender has agreed after the reporting period and before the
issuance of the statements not to demand payment as a consequence of the
breach

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 d. Noncurrent if the lender agreed after the reporting period to provide a grace
period for at least twelve months after the reporting period.
17. Assets to be sold, or realized as part of the normal operating cycle are
a. Current assets
b. Noncurrent assets
c. Classified as current or noncurrent in accordance with other criteria
d. Noncurrent investments
18. Liabilities that an entity expects to settle within the normal operating cycle are
classified as
a. Noncurrent liabilities
b. Current or noncurrent liabilities in accordance with other criteria
c. Current liabilities
d. Equity
19. In which section of the statement of financial position should cash that is restricted
for the settlement of a liability due 18 months after the reporting period be
presented?
a. Current assets
b. Equity
c. Noncurrent liabilities
d. Noncurrent assets
20. Which is an essential characteristics of an asset?
a. The claims to the benefits are legally enforceable
b. Assets is tangible
c. An asset is obtained at a cost
d. An asset is a present economic resource

Nikko Company has the following balances as a period end December 31, 2021.

Cash on hand P 60,000.00

Cash in bank- DBP current 1,000,000.00
Accounts receivable 2,000,000.00
Allowance for doubtful accounts 25,000.00
Trade notes receivable- due in 2023 1,500,000.00
Note receivable- due 3/31/2023 1,200,000.00
Advances to employees 35,000.00
Inventories 740,000.00
Subsriptions receivable- collectible in 2024 1,460,000.00
Advances to suppliers 93,000.00
Held for trading securities 244,000.00
Investment in equity securities- FVOCI 2,600,000.00
Investment in Subsidiary 10,550,000.00
Investment in Associate 3,400,000.00
Cash surrender value 450,000.00
Land 4,500,000.00
Building 8,000,000.00
Accumulated depreciation- building 1,750,000.00
Equipment 800,000.00
Accumulated depreciation-equipment 225,000.00
Office supplies 65,000.00
Prepaid expenses 77,000.00
Deferred tax asset 150,000.00
Financial asset at amortized cost 880,000.00

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 Financial asset at fair value through
other comprehensive income 2,050,000.00
Treasury shares, at cost 660,000.00
Goodwill 500,000.00
Patent 450,000.00
Franchise 330,000.00
Copyright 220,000.00
Trademark 455,000.00

21. How much is the total current assets? P5,789,000

22. How much is the total noncurrent assets? P34,860,000
Solution:

Current Noncurrent
Cash on Hand 60,000.00
Cash in bank- DBP current 1,000,000.00
Accounts receivable 2,000,000.00
Allowance for doubtful accounts (25,000.00)
Trade notes receivable- due in 2023 1,500,000.00
Notes receivable- due 3/31/2023 1,500,000.00
Advances to employees 35,000.00
Inventories 740,000.00
Subscriptions receivable - -
Advances to suppliers 93,000.00
Held for trading securities 244,000.00
Investment in equity securities- FVOCI 2,600,000.00
Investment in subsidiary 10,550,000.00
Investment in associate 3,400,000.00
Cash surrender value 450,000.00
Land 4,500,000.00
Building 8,000,000.00
Accumulated depreciation- Bldg. (1,750,000.00)
Equipment 800,000.00
Accumulated depreciation- Equipment (225,000.00)
Office supplies 65,000.00
Prepaid expenses 77,000.00
Deferred tax asset 150,000.00
Financial asset @AC 880,000.00
Financial asset @FVOCI 2,050,000.00
Treasury shares, at cost - -
Goodwill 500,000.00
Patent 450,000.00
Franchise 330,000.00
Copyright 220,000.00
Trademark 455,000.00
Totals 5,789,000.00 34,860,000.00

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The LORIE CO.has its following liabilities as of December 31, 2021.

Accounts payable, including deposits and

advances from customer of P250,000 P 1,250,000.00
Notes payable:
Trade 3,000,000.00
Bank loans payable- 12% due 3/31/2022 2,000,000.00
Advances from officers 500,000.00
Notes payable, including note payable due to
bank on 12/31/2023 of P500,000 1,500,000.00
Share dividend payable 400,000.00
Dividends payable 1,000,000.00
Bank overdraft 300,000.00
Credit balances in customers' accounts 200,000.00
Accrued interest payable 150,000.00
Mortgage payable 3,800,000.00
Income tax payable 850,000.00
Premium Liability 245,000.00
Warranty Liability 160,000.00
Deferred tax liability 95,000.00
Bonds payable-8 %, due in 6/30/2021 2,450,000.00

Additional Information:
1. The deferred tax liability is expected to reverse in 2022.
2. LORIE Co. was sued by JOEBIN CO. through a copyright infringement case . The legal
counsel of LORIE Co. expects that the company would pay estimated damages for
the lawsuit in early 2022, at P500,000.
3. LORIE Co. entered into a refinancing agreement with Marielle Co. on December 12,
2021 to refinance the 8% bonds payable on a long-term basis. The refinancing
agreement was completed on January 25, 2022 before the financial statements
was authorized for issue.

23. How much is the current liabilities ? P13,105,000

24. How much is the noncurrent liabilities? P4,395,000
Solution:

Current Noncurrent
Accounts payable 1,000,000.00
Advances from customers 250,000.00
Trade notes payable 3,000,000.00
Bank loans payable- 12% 2,000,000.00
Advances from officers 500,000.00
Notes payable 1,000,000.00
Notes payable- bank, due 12/31/23 500,000.00
Share dividends payable - -
Dividends payable 1,000,000.00
Bank overdraft 300,000.00
Credit balances in customer's accounts 200,000.00
Accrued interest payable 150,000.00
Mortgage payable 3,800,000.00

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 Income tax payable 850,000.00
Premium liability 245,000.00
Warranty liability 160,000.00
Deferred tax liability 95,000.00
Bonds payable- 8% due 6/30/2021 2,450,000.00
Totals 13,105,000.00 4,395,000.00

Jayson Company provided the following information for the year ended December 31, 2021

Utilities expense P125,000.00

Delivery expense 425,000.00
Depreciation expense- delivery truck 60,000.00
Depreciation expense- Office equipment 35,000.00
Depreciation expense- Store equipment 25,000.00
Dividends paid 450,000.00
Dividend revenue 50,000.00
Doubtful accounts expense 30,000.00
Interest revenue 280,000.00
Income tax expense 300,000.00
Freight in 145,000.00
Gain on sale of equipment 10,000.00
Loss on sale of trading securities 50,000.00
Loss from inventory writedown 150,000.00
Unrealized gain on Financial assets at Fair value
through other comprehensive income 95,000.00
Merchandise Inventory, January 01 1,100,000.00
Office salaries 950,000.00
Purchase discounts 45,000.00
Purchase returns 65,000.00
Purchases 4,500,000.00
Retained Earnings, January 01 550,000.00
Sales 8,750,000.00
Sales returns 100,000.00
Sales discounts 50,000.00
Unrealized gain on Financial assets at Fair value
through profit or loss 100,000.00
Sales salaries 600,000.00
Revaluation surplus 25,000.00
Store supplies expense 150,000.00
Office supplies expense 120,000.00

Inventory at year end was valued at P850,000, P1,000,000 cost less the P150,000
writedown of inventory to net realizable value.
25. How much was the Gross Profit for the year ended December 31, 2021? P3,725,000
26. How much was the cost of goods sold for the year? P4,875,000
27. How much was the total selling expenses for the year? P1,260,000
28. How much was the net income for 2021? P1,145,000
29. How much was the total Other comprehensive Income for 2021? P120,000
30. How much as the Total Comprehensive Income in accordance with PAS 1?
P1,265,000

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Solution:

JAYSON COMPANY
INCOME STATEMENT
FOR THE PERIOD ENDING DECEMBER 31, 2021

Sales 8,750,000.00
Deduct: Sales returns (100,000.00)
Sales discounts (50,000.00)
Net Sales 8,600,000.00
Deduct: Cost of goods sold
Merchandise Inventory, January 01 1,100,000.00
Net Purchases 4,390,000.00
Freight in 145,000.00
Available for sale 5,635,000.00
Merchandise Inventory, December 31 (850,000.00) (4,875,000.00)

Gross Profit 3,725,000.00

Add: Other Income
Dividend revenue 50,000.00
Gain on sale of equipment 10,000.00
Interest revenue 280,000.00
Unrealized gain on FA @ FVPL 100,000.00 440,000.00
Total Income 4,165,000.00

Operating Expenses:

Selling Expenses:
Delivery expense 425,000.00
Depreciation expense- delivery truck 60,000.00
Depreciation expense- store equipment 25,000.00
Sales salaries 600,000.00
Store supplies expense 150,000.00 (1,260,000.00)

Administrative Expenses:
Utilities expense 125,000.00
Depreciation expense- office equipment 35,000.00
Doubtful accounts expense 30,000.00
Office salaries 950,000.00
Office supplies expense 120,000.00 (1,260,000.00)

Other expenses:
Loss on sale of trading activities 50,000.00
Loss on inventory writedown 150,000.00 (200,000.00)

Income before tax 1,445,000.00

Deduct: Income tax expense (300,000.00)
Net Income 1,145,000.00

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 JAYSON COMPANY
STATEMENT OF COMPREHENSIVE INCOME
FOR THE PERIOD ENDING DECEMBER 31, 2021

Net Income 1,145,000.00

Add/Deduct: OCI adjustments
Unrealized gain on FA @FVOCI 95,000.00
Revaluation surplus 25,000.00 120,000.00
Total Comprehesive Income 1,265,000.00

The Qualifying Company has the following information at December 31, 2021.

Cash and Cash Equivalents, January 01 P1,011,000

Cash and Cash Equivalents, December 31 940,000
Receipts from customers 5,600,000
Purchase of land 1,500,000
Purchase of trading securities 770,000
Proceeds from sale of land 950,000
Purchase of Treasury shares at cost 255,000
Payment to suppliers 3,400,000
Proceeds from issuance of bonds payable-10% 5,000,000
Retirement of bonds payable 2,230,000
Reissuance of treasury shares 300,000
Payment of salaries 918,000
Payment of rent 667,000
Issuance of notes receivable-12% 1,200,000
Payment of interest 235,000
Payment of income taxes 850,000
Cash received from payment of notes receivable 540,000
Proceeds from Issuance of short-term loans payable 444,000
Proceeds from Issuance of ordinary shares, P50 par 1,000,000
Payment of dividends 2,300,000
Payment for other expenses 460,000
Issuance of ordinary shares in exchange of land 1,800,000
Receipt from dividends received 880,000

31. Using direct method, how much is the net cash provided (used) by operating
activities? P(820,000)
32. Using direct method, how much is the net cash provided (used) by investing
activities? P(1,210,000)
33. Using direct method, how much is the net cash provided (used) by investing
activities? P1,959,000

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Solution:

Operating Investing Financing

Receipts from customers 5,600,000.00
Purchase of land (1,500,000.00)
Purchase of trading securities (770,000.00)
Proceeds from sale of land 950,000.00
Purchase of treasury shares, at cost (255,000.00)
Payment to suppliers (3,400,000.00)
Proceeds from issuance of bonds payable 5,000,000.00
Retirement of bonds payable (2,230,000.00)
Reissuance of treasury shares 300,000.00
Payment of salaries (918,000.00)
Payment of rent (667,000.00)
Issuance of notes receivable (1,200,000.00)
Payment of interest (235,000.00)
Payment of income taxes (850,000.00)
Cash received from payment of notes receivable 540,000.00
Proceeds from issuance of short term loans payable 444,000.00
Proceeds from issuance of ordinary shares 1,000,000.00
Payment of dividends (2,300,000.00)
Payment for other expenses (460,000.00)
Receipt from dividends received 880,000.00
Net cash provided (used) (820,000.00) (1,210,000.00) 1,959,000.00

Net Decrease in Cash and Cash Equivalents (71,000.00)

Cash and Cash Equivalents, January 01 1,011,000.00
Cash and Cash Equivalents, December 31 940,000.00

Segura Inc. is preparing its cash flow statement for the period ending December 31, 2021.
The information related to its financial statements at year-end appears below:

Segura Incorporated
Comparative Statement of Financial Position
As of December 31, 2021 and 2020

ASSETS 2021 2020

Cash and Cash Equivalents P 6,000 P 9,000
Short term investments
(trading) 35,000 18,000
Accounts receivable 62,000 49,000
Inventory 40,000 60,000
Prepaid Rent 5,000 4,000
Equipment 154,000 130,000
Accumulated dep'n-
equipment (35,000) (25,000)
Copyrights 46,000 50,000
Total Assets P 313,000 P 295,000

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LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable P 46,000 P 42,000
Salaries and wages payable 8,000 4,000
Short term loans payable 8,000 10,000
Income taxes payable 4,000 6,000
Long term loans payable 60,000 67,000
Ordinary shares, P10 par 100,000 100,000
Ordinary share premium 30,000 30,000
Retained Earnings 57,000 36,000
Total liabilities and shareholders' equity P 313,000 P 295,000

Segura Incorporated
Income Statement
For the year ended December 31, 2021

Sales revenue P 338,150

Cost of goods sold (175,000)
Gross Profit 163,150
Operating expenses (120,000)
Operating income 43,150
Interest expenses 11,400
Gain on sale of equipment 2,000 (9,400)
Income before tax 33,750
Income tax expense (6,750)
Net Income P 27,000

Additional Information:
• Dividends in the amount of P6,000 were declared and paid in 2021.
• Depreciation expense and amortization expense are included in the operating
expense
• No unrealized gains and losses have occurred on investments during the year.
• Equipment costing P30,000 and was 70% depreciated was sold on 2021.

34. How much is the net cash provided (used) by operating activities?P55,000
35. How much is the net cash provided (used) by investing activities?P(43,000)
36. How much is the net cash provided (used) by financing activities?P(15,000)
Solution:

Operating Investing Financing

Net Income 27,000.00
Purchase of short term investments (17,000.00)
Increase in accounts receivable (13,000.00)
Decrease in Inventory 20,000.00
Increase in Prepaid rent (1,000.00)
Sale of equipment 11,000.00
Gain on sale of equipment (2,000.00)
Purchase of Equipment (54,000.00)

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 Depreciation expense 31,000.00
Amortization expense 4,000.00
Increase in accounts payable 4,000.00
Increase in salaries payable 4,000.00
Payment of short term loans payable (2,000.00)
Decrease in income taxes payable (2,000.00)
Payment for long term loans payable (7,000.00)
Payment for dividends (6,000.00)
Net cash provided (used) 55,000.00 (43,000.00) (15,000.00)

Net decrease in cash and cash equivalents (3,000.00)

Cash and cash equivalents, January 01 9,000.00
Cash and cash equivalents, December 31 6,000.00

PART C (ACCOUNTING FOR CORPORATION- 40%)

37. Which of the following would not be considered a characteristic of a corporation?
a. Separate Legal Entity
b. Limited Liability of Shareholders
c. Mutual Agency
d. Both a and c
38. The maximum number of shares of stock that the government gives a corporation
permission to issue is the
a. Granted Shares
b. Authorized Shares
c. Issued Shares
d. Outstanding shares
39. The cost of organizing a corporation should be
a. Expensed in the year of organization
b. Reported as an intangible asset
c. Reported as a tangible asset
d. Deducted from share capital
40. Cash dividends declared but not paid as of the statement of financial position date
are reported as
a. Current liability
b. Deduction from cash
c. Addition to share capital
d. Addition to share premium
41. Which of the following statements about treasury shares is (are) true?
a. Treasury shares are recorded at cost
b. Purchase of treasury shares reduces the corporation’s total assets and total
shareholders’ equity
c. Treasury shares are issued shares that are subsequently reacquired hence
they are no longer outstanding
d. All of the above statements are true
For items no. 42-48 (7 points) record the following transactions took place at the newly
formed LAHAM KITA Corporation.
a) Received authorization from the SEC to issue 50,000 preference shares, P100 par
value and 500,000 ordinary shares, P20 par value
b) Issued 30,000 ordinary shares at P25 per share.
c) Issued 2,000 preference shares as compensation for services rendered by the
corporation’s legal counsel. The legal fees amounted to P220,000.
d) Received subscriptions for preference shares at P120 per share from the following:

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 Lorie 5,000 shares
Aimee 6,000 shares
Marielle 4,000 shares
A downpayment of 30% was received.
e) Issued 25,000 ordinary shares in exchange of land, the fair value of shares is P30.
The land has an appraised fair value of P650,000.
f) Received subscription for ordinary shares at P30 per share from the following:

Nikko 100,000 shares

Gerald 75,000 shares
A downpayment of 20% was received.
g) The subscribers of preference shares paid another 30% of their subscriptions.
h) Nikko paid his subscription in full and shares of stocks were issued to him. Gerald
paid additional 40% of his subscription.
i) Lorie, Aimee and Marielle paid the balance of their subscriptions and shares of
stocks were issued to them.
j) Gerald paid the balance of his subscription and shares of stocks were issued to him.
Solution:

a.) Authorized to issue 50,000 preference shares, P100 Par value and 500,000 ordinary
shares, P20 par value.

b.) Cash 750,000.00

Ordinary share capital 600,000.00
Ordinary share premium 150,000.00

c.) Organizational expense 220,000.00

Preference share capital 200,000.00
Preference share premium 20,000.00

d.) PS Subscriptions receivable 1,800,000.00

Subscribed preference share capital 1,500,000.00
Preference share premium 300,000.00

Cash 540,000.00
PS Subscriptions receivable 540,000.00

e.) Land 650,000.00

Ordinary share capital 500,000.00
Ordinary share premium 150,000.00

f.) OS subscriptions receivable 5,250,000.00

Subscribed ordinary share capital 3,500,000.00
Ordinary share premium 1,750,000.00

Cash 1,050,000.00
OS subscriptions receivable 1,050,000.00

g.) Cash 540,000.00

PS Subscriptions receivable 540,000.00

h.) Cash 2,400,000.00

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 OS subscriptions receivable 2,400,000.00

Subscribed ordinary share capital 2,000,000.00

Ordinary share capital 2,000,000.00

Cash 900,000.00
OS subscriptions receivable 900,000.00

i.) Cash 720,000.00

PS Subscriptions receivable 720,000.00

Subscribed preference share capital 1,500,000.00

Preference share capital 1,500,000.00

j.) Cash 900,000.00

OS subscriptions receivable 900,000.00

Subscribed ordinary share capital 1,500,000.00

Ordinary share capital 1,500,000.00

Jayson Corp. has the following account balances as at year end:

Preference share capital- 8%, P50 par value P 1,440,000

Ordinary share capital, P10 par value 1,360,000
Subscribed preference share capital 720,000
Subscribed ordinary share capital 280,000
Subscriptions receivable- Preference 360,000
Subscriptions receivable- Ordinary 182,000
Share premium- Preference 216,000
Share premium- Ordinary 328,000
Retained Earnings 1,500,000
Treasury ordinary shares, at cost of P20 per share 100,000

49. How many ordinary shares are entitled to received dividends? 159,000 shares
50. The amount of dividends to preference shareholders would be? 172,800
Solution:

Preference Ordinary
Issued shares 1,440,000.00 1,360,000.00
Subscribed shares 720,000.00 280,000.00
Treasury shares* (50,000.00)
Outstanding and subscribed 2,160,000.00 1,590,000.00
Divide by par value per share 10.00
159,000 shares
Multiply by Dividend rate 8%
Amount of dividends 172,800.00

Treasury shares*= (P100,000÷P20) x P10 par = P50,000

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Kevin Corp. has its following balances for the year ended December 31, 2021.

Dividends payable P 40,000

Ordinary share capital, P5 par, 500,000
shares authorized 750,000
Ordinary share capital subscribed 25,000
Ordinary share premium 50,000
10% Preference share capital, P25 par, 25,000
shares authorized 300,000
Preference share premium 30,000
Retained earnings appropriated for Contingencies 150,000
Retained earnings appropriated for sinking fund 100,000
Retained earnings- unappropriated 450,000
Share dividends payable 105,000
Share premium- share dividends 63,000

51. How much is the total amount of Contributed Capital? P1,323,000

52. How much is the total amount of is the total amount of retained earnings? P700,000
53. How much is the total shareholders’ equity? P2,023,0000
Solution:

Legal capital/Share capital:

10%-Preference share capital, P25 300,000.00
Ordinary share capital, P5 par 750,000.00
Ordinary share capital subscribed 25,000.00
Share dividends payable 105,000.00
1,180,000.00
Additional paid in capital:
Share premium- Preference 30,000.00
Share premium- ordinary 50,000.00
Share premium- share dividends 63,000.00
143,000.00
Total contributed capital 1,323,000.00
Retained Earnings:
Appropriated for contingencies 150,000.00
Appropriated for sinking fund 100,000.00
Unappropriated 450,000.00
700,000.00
Total shareholders' equity 2,023,000.00

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BEBE Corp. presented a statement of financial position containing the following accounts
among others:

Subscriptions receivable- Preference P 120,000

Subscriptions receivable- Ordinary 160,000
Preference share capital, P100 par, 22,000 shares
issued and outstanding 2,200,000
Preference share capital subscribed, 2,000 shares 200,000
Ordinary share capital, P10 par value, 24,000 shares
issued and outstanding 240,000
Accounts receivable 145,000
Ordinary share capital subscribed, 24,000 shares 240,000
Retained earnings 500,000
Share premium- Preference 80,000
Share premium- Ordinary 80,000

54. How much is the legal capital? P2,600,000

55. How much the total contributed capital? P2,760,000
Solution:

Legal capital/Share capital:

Preference share capital, P100 2,200,000.00
Ordinary share capital, P10 par 240,000.00
Preference share subscribed 200,000.00
PS subscription receivable (120,000.00)
Ordinary share capital subscribed 240,000.00
OS subscription receivable (160,000.00)
2,600,000.00
Additional paid in capital:
Share premium- Preference 80,000.00
Share premium- ordinary 80,000.00
160,000.00
Total contributed capital 2,760,000.00

JOEBIN REVIEW Corp. has the following account balances taken from its financial
statements at year end:

Cash in bank- BPI current P 755,000

Share dividends payable 105,000
Preference share capital- 8%, P50 par value 1,550,000
Ordinary share capital, P10 par value 2,000,000
Subscribed preference share capital 920,000
Subscribed ordinary share capital 480,000
Subscriptions receivable- Preference 460,000
Subscriptions receivable- Ordinary 282,000
Share premium- Preference 316,000
Share premium- Ordinary 428,000
Income tax payable 233,000
Dividends payable 137,000
Retained earnings appropriated for Contingencies 667,000
Retained earnings appropriated for Treasury shares 250,000

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 Retained Earnings- unappropriated 1,320,000
Treasury ordinary shares, at cost 250,000

For items 56-60, Prepare the Shareholders’ Equity section of JOEBIN REVIEW CENTER as of
December 31, 2021.
Solution:

SHAREHOLDERS' EQUITY
Share capital:
8%-Preference share capital, P50 par P 1,550,000.00
Ordinary share capital, P10 par 2,000,000.00
Subscribed preference shares 920,000.00
Subscriptions receivable- Preference (460,000.00)
Subscribed ordinary shares 480,000.00
Subscriptions receivable- Ordinary (282,000.00)
Share dividends payable 105,000.00
4,313,000.00
Additional paid in capital:
Share premium- Preference 316,000.00
Share premium- Ordinary 428,000.00
744,000.00
Total Contributed Capital 5,057,000.00
Retained Earnings:
Appropriated for Contingencies 667,000.00
Appropriated for Treasury shares 250,000.00
Unappropriated 1,320,000.00
2,237,000.00
Total Contributed Capital and Retained Earnings 7,294,000.00
Deduct: Treasury shares, at cost (250,000.00)
Total Shareholders' Equity P 7,044,000.00

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