At the beginning of current year, Guess Company was organized and authorized to

issue 100,000 shares with P50 par value.

During the current year, the entity had the following transactions relating to
shareholders' equity:
 Issued 10,000 shares at P70 per share.
 Issued 20,000 shares at P80 per share.
 Reported net income of P1,000,000.
 Paid dividends of P200,000.
 Purchased 3,000 treasury shares at P100 per share.
1.What amount should be reported as share capital at year-end?
a. 3,300,000
b. 1,500,000
c. 1,200,000
d. 1,800,000
2.What amount should be reported as share premium at year-end?
a. 200,000
b. 800,000
c. 600,000
d. 0
3.What amount should be reported as Retained earnings at year-end?
4.What amount should be reported as total shareholders' equity at year-end?
a. 3,000,000
b. 2,800,000
c. 3,300,000
d. 2,000,00
5.What amount should be reported as contributed capital at year-end?
a. 1,500,000
b. 2,300,000
c. 3,000,000
d. 2,000,000

At the beginning of current year, Rudd Company had 700,000 ordinary shares
authorized and 300,000 shares outstanding.
January 31 Declared 10% share dividend (assume distributed)
June 30 Purchased 100,000 shares
August 1 Reissued 50,000 shares
November 30 Declared 2-for-1 share split
6. How many ordinary shares are issued at year-end? solve
7. How many ordinary shares are outstanding at year-end?
a. 600,000
b. 630,000
c. 560,000
d. 660,000

At the beginning of current year, Dayron Company had 80,000 ordinary shares
outstanding. The entity distributed a 20% share dividend in March and a 50%
share dividend in June. After acquiring 20,000 shares of treasury in July,
the entity split the share 5 for 1 in December.
8. How many ordinary shares are outstanding on December 31?
a. 720,000
b. 700,00
c. 144,000
d. 620,000
9. How many ordinary shares are issued at year-end? Solve
Cyan Company issued 200,000 shares of P5 par value at P10 per share. At the
beginning of current year, the retained earnings amounted to P3,000,000.
In March, the entity reacquired 50,000 treasury shares at P20 per share. In June, the
entity sold 10,000 of these shares to corporate officers for P25 per share. The entity
used the cost method to record treasury shares.
Net income for the current year was P600,000.
10.What total amount should be reported as retained earnings at year-end?
a. 4,400,000
b. 3,600,000
c. 2.200,000
d. 3.400,000
11. What amount should be reported as unappropriated retained earnings at year-
end?
a. 3,600,000
b. 3,650,000
c. 2,800,000
d. 3,750,000

At the beginning of current year, Lauretta Company reported the following

shareholders' equity:
Share capital 1,500,000
Share premium 3,000,000
Retained earnings 2,000,000
The entity had 400,000 authorized shares of P5 par value, of which 300,000 shares
were issued and outstanding.
During the year, the entity acquired 50,000 shares for P10 per share to be held as
treasury. The shares were originally issued at P8 per share The entity used the
cost method to account for treasury shares.
At year-end, the entity declared and distributed a property dividend of inventory.
The inventory had a P750,000 carrying amount and a P1,000,000 fair value. The
net income for the current year was P2,500,000

12.What amount should be reported as unappropriated retained earnings at year-

end?
a. 3,500,000
b. 3,250,000
c. 3,350,000
d. 3,000,000
13.What amount should be reported as appropriated retained earnings at year-
end?
a. 250,000
b. 500,000
c. 750,000
d. 400,000

Global Company, a real estate developer, is owned by five founding shareholders.

On December 1, 2021, the entity declared a property dividend of a "one-bedroom
flat" for each shareholder. The property dividend is payable on January 31, 2022.
On December 1, 2021, the carrying amount of a one-bedroom flat is P1,000,000 and
the fair value is P1,500,000.
However, the fair value is P1,800,000 on December 31, 2021 and P1,900,000 on
January 31, 2022.

14.What amount should be reported as dividend payable on December 1,2021?

a. 5,000,000
b. 7,500,000
c. 9,000,000
d. 0
15.What amount should be reported as dividend payable on December 31, 2021?
a. 5,000,000
b. 7,500,000
c. 9,000,000
d. 0
16.What amount of gain is included in profit or loss as a result of the settlement of
the property dividend on January 31, 2022? 4,500,000

On January 1, 2021, Easy Company had ordinary and preference shares

outstanding. The incorporators or original shareholders own ten ordinary shares
but no preference shares.
On December 31, 2021, the entity declared dividends on the ordinary shares. The
entity decided to give the ordinary shareholders a choice between receiving a cash
dividend of P500,000 per share or a property dividend in the form of a noncash
asset.
The noncash asset is a standard model from the entity's car fleet. Each car has a
fair value of P600,000 and carrying amount of P450,000. The fair value of the car
is P700,000 on December 31, 2022.
The entity estimated that 80% of the ordinary shareholders will take the option of
the cash dividend and 20% will elect for the noncash asset.
17.What amount should be recognized as dividend payable on December 31,
2021?
a. 5,200,000
b. 5,500,000
c. 4,000,000
d. 6,000,000
18.2. What amount should be reported as gain on distribution of property dividend in
2022 if the shareholders elected to receive the noncash asset?
a. 2,000,000
c. 1,500,000
c. 2,500,000
d. 1,800,000
19.3. What is included in the journal entry on December 31, 2022 if the shareholders
elected to receive the cash?
a. Debit dividend payable P5,200,000
b. Credit cash P5,000,000
c. Credit retained earnings P200,000
d. All of these are included in the journal entry

At the beginning of the current year, Sol Company declared a 10% share
dividend. The market price of the entity's 300,000 outstanding shares of P50 par
value was P40 per share on that date.
The share dividend was distributed on July 1 when the market price was P100 per
share.
20.What amount should be credited to share premium for the share dividend?
a. 1,200,000
b. 2,700,000
c. 1,500,000
d. 0

21.What if the market price of outstanding shares on the date of

declaration was P90, what amount should be credited to share premium for
the share dividend?

At the current year-end, Grey Company issued 3,000 ordinary shares of P100 par
value in connection with a share dividend. The market value per share on the
date of declaration was P150. The share dividend was distributed before year
end. The shareholders' equity accounts immediately before issuance of the share
dividend were:
Ordinary share capital P100 par, 50,000 shares 2,000,000
authorized, 20,000 shares outstanding
Share premium 3,000,000
Retained earnings 1,500,000
22.What amount should be reported as retained earnings immediately after the
share dividend?
a. 1,100,000
b. 1,050,000
c. 2,100,000
d. 900,000
23.What amount should be credited to share premium for the share dividend?
150,000

At the beginning of the current year, Flash Company had retained earnings of
P4,000,000.1 Throughout the year, the entity has 600,000 shares of PIO par
value issued and outstanding. During the year, the entity reported net income of
P2.000,000, sold treasury shares at a "gain" of P720,000. declared a cash
dividend of P1,200,000, and declared and issued a 10% share bonus issue when
the fair value of the share was P20.
24.What amount of retained earnings should be reported at the end of the current
year?
a. 4,920,000
b. 4,200,000
c. 4,320,000
d. 3,600,000

Zoe Company reported the following shareholders' equity at year-end:

Share capital, par P25, authorized 150,000 shares,
55,000 shares issued of which 5,000 shares are in treasury
1,375,000
Retained earnings 2,000,000
Treasury shares, at cost 150,000
A 100% share dividend was declared and all of the treasury shares were issued
as share dividend and the balance from the unissued shares. The share has
market value of P40.
25.What amount of retained earnings should be capitalized (deduct)?
a. 1,250,000
b. 1,800,000
c. 1,275,000
d. 1,125,000

On December 31, 2021, Blake Mining Company declared a cash dividend of

P800,000 to shareholders of record on January 15, 2022 and payable on
February 15, 2022.
The entity reported the following information on December 31, 2021:
Accumulated depletion 200,000
Share capital 1,000,000
Share premium 300,000
Retained earnings 600,000
26.What amount should be recognized as liquidating dividend?
a. 600,000
b. 300,000
c. 200,000
d. 50,000

On January 1, 2021, Eagle Company reported P1,750,000 of appropriated

retained earnings for the construction of a new office building, which was
completed in 2021 at a total cost of P1,500,000,
In 2021, the entity appropriated P1,200,000 of retained earnings for the
construction of a new plant.
Also, P2,000,000 of cash was restricted for the retirement of bonds
due in 2022.
27.On December 31, 2021, what amount should be reported as appropriated
retained earnings?

At the beginning of current year, Rama Company had 20,000 treasury shares
of P100 par value that had been acquired in prior year at P120 per share.
In December, the entity reissued 15,000 of these treasury shares at P150 per
share.
28.What amount should be reported as a restriction of retained earnings as a
result of the treasury share transaction at year-end?
a. 2,400,000
b. 1,800,000
c. 600,000
d. 500,000

Brown Company provided the following shareholders' equity at year-end:

Share capital, P30 par, 100,000 shares
authorized and outstanding 3,000,000
Share premium 1,500,000
Retained earnings (deficit) (2,100,000)
The entity put into effect a quasi-reorganization by reducing the per value of
the share to P5 and eliminating the deficit against share premium
29.Immediately after the quasi-reorganization, what amount should be reported
as share premium?
a. 1,500,000
b. 1,900,000
c. 4,000,000
d. 600,000

Christelle Company had incurred heavy losses since inception. At the

recommendation of chief executive officer, the board of directors voted to
implement a quasi-reorganization, subject to approval of shareholders.
Immediately prior to the quasi-reorganization, the entity reported the
following shareholders' equity:
Share capital, P100 par, 500,000 shares 50,000,000
Share premium 5,000,000
Retained earnings (deficit) (8,000,000)
The shareholders approved the quasi-reorganization to be accomplished by
reduction in inventory P2,000,000, reduction in property, plant and
equipment P4,000,000, writeoff of goodwill P1,000,000 and appropriate
adjustment to the capital structure against share premium first and any
remaining deficit against the share capital account.
30.What is the reduction in the share capital account to implement the quasi-
reorganization? (4 points)

Company should undergo a quasi-reorganization.

The following information may be relevant in accounting for the quasi-organization:
 Inventory with a fair value of P2,000,000 is currently recorded in the accounts
at cost of P2,500,000.
 Plant assets with a fair value of P7,000,000 are currently recorded at
P8,500,000 net of accumulated depreciation.
 Individual shareholders contribute P4,000,000 to create additional capital to
facilitate the reorganization. No new shares are issued.
 The par value of the share is reduced from P25 to P5.
The shareholders' equity before the quasi-reorganization comprised the following:
Share capital, P25 par value, 100,000 shares.
authorized and outstanding 2,500,000
Share premium 1,750,000
Retained earnings (deficit) (3,000,000)
1,250,000
31.After the quasi-organization, what amount should be reported as share
premium? 5 points