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PROBLEM 2
Nest Co. issued 100,000 shares of common stock. Of these, 5,000 were held
as treasury stock at December 31, 2002. During 2003, transactions involving
Nests common stock were as follows:
May 3 1,000 shares of treasury stock were sold.
August 6 10,000 shares of previously unissued stock were sold.
November 18 A 2-for-1 stock split took effect.
December 1 500 shares was acquired
December 4 A 3-for-1 stock split took effect
Laws in Nests state of incorporation protect treasury stock from dilution. At
December 31, 2003, how many shares of Nests common stock were issued
and outstanding?
PROBLEM 3
Given the following accounts, compute for Georgina Corporations total contributed capital:
PROBLEM 4
The following transactions occurred:
a. Upper East Side Company is authorized to issue 400,000 par value shares with par value of 15
per share and 100,000 preference shares, no par, with stated value of 25 per share.
b. Received subscriptions of 100,000 par value shares for 18 per share.
c. Issued 30,000 no par shares for 30 per share.
d. Received partial payment on the subscription of with par value shares, P 1,000,000.
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CAGAYAN STATE UNIVERSITY
DISCUSSION IN CORPORATION ACCOUNTING
e. Sold 50,000 with par value shares for P 1,000,000.
f. Net Income for the period amounted to P 550,000.
g. Dividend declared for the period: 10% cash dividend for with par value shares and no par
value shares.
How much is the Legal Capital of Upper East Side Company?
PROBLEM 5
The following transactions occurred:
a. Jenny Company had a Net Income for 2006, 2007, 2008 of 123,456,
456,789 and 789,123 respectively.
b. They had a Net Loss of 98,765 on 2005
c. On 2007, Jenny Company appropriated 300,000 of its Accumulated Profits
for Plant Expansion
d. On 2008, it reversed its appropriation of 200,000 from 2004s contingency
fund.
*** Accumulated Profits - Free, December 31, 2008 amounted to 1,234,567.
Assume that these are the only transactions affecting the Accumulated
Profits Account. Compute for Jenny Companys December 31, 20004
Accumulated Profits
PROBLEM 6
On March 1, 2003, Rya Corp. issued 1,000 shares of its P20 par value common stock and 2,000
shares of its P20 par value convertible preferred stock for a total of P80,000. At this date, Ryas
common stock was selling for $36 per share,and the convertible preferred stock was selling for
P27 per share. What amount of the proceeds should be allocated to Ryas convertible preferred
stock?
PROBLEM 7
Creation Company issued 6,000 shares of its P10 par common stock to
Fashion as compensation for 1,000 hours of legal services performed.
Fashion usually bills P500 per hour for legal services. On this date of
issuance, the stock was selling at a public trading at P150 per share. By what
amount should the share premium account of Creation Company will
increase as a result of the issuance of those shares?
PROBLEM 8
The stockholders equity section of Dainty Corporation's balance sheet at
December 31, 2005 was as follows:
Ordinary share P10 par value, authorized 1,000,000 shares
Issued and outstanding 900,000 shares
P9,000,000
Share premium
2,700,000
Accumulated profits
1,300,000
Total Stockholders Equity
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CAGAYAN STATE UNIVERSITY
DISCUSSION IN CORPORATION ACCOUNTING
P13,000,000
On January 2, 2006, Dainty purchased and retired 100,000 shares of its stock
for P1,800,000. Immediately after the retirement of these 100,000 shares.
How much should be the balance in the additional paid in capital and
retained earnings, respectively?
PROBLEM 9
The Rand Corporation began the current year with a retained earnings
balance of P25,000. During the year, the company corrected an error made
in the prior year, which was a failure to record depreciation expense of
P3,000 on equipment. Also, during the current year, the company earned net
income of P12,000 and declared cash dividends of P5,000.
PROBLEM 10
Bagsak na Kayo Company was organized on January 1, 2006. The corporation
presented a balance sheet containing the following items among others.
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CAGAYAN STATE UNIVERSITY
DISCUSSION IN CORPORATION ACCOUNTING
corporation issued 8,000 shares of its common stock in exchange for a tract
of land with a fair value of P230,000. Compute the amount of
contributed capital for each class of stock at year end.
PROBLEM 11
May Pag-asa Pa Corporation paid dividends of P200,000 and P300,000 at the end of 2005 and
2006, respectively. The corporation has not paid any other dividends since its organization on
January 1, 2005. the outsanding shares are 20,000. 12% preferred shares, par P100 and 30,000
common shares, par P100. If preffered is non-cumulative and nonparticipating, preferred and
common, respectively, will receive in 2005? If preferred is cumulative and nonparticipating,
preferred and common, respectively, will receive in 2006?
PROBLEM 12
Never Doubt Corporation's retained earnings at December 31, 2010 amounted to P1,000,000.
On that date, Never Doubt Corporation's declared a property dividend. The property to be
distributed had a carying value of P200,000 and a fair market value of P280,000 on the date of
declaration. How much gain should Never Doubt Corporation's recognized as a result of this
distribution?
PROBLEM 13
On September 30, 2005. Masipag Company issued 3,000 shares of its P100 par common stock
in connection with a stock dividend. No entry was made on the stock dividend declaration date.
The market value per share immediately after issuance was P120. Masipag 's stockholders
equity accounts immediately before issuance of the stock dividend shares were follows:
Common stock, P100 par, 50,000 shares authorized; 20,000 shares o/s P2,000,000
Additional paid in capital 3,000,000
Retained earnings 3,500,000
What should be the total stockholders' equity immediately after the stock dividend?
PROBLEM 14
Have Faith Corporation declared stock dividends of 1 share for every 5 shares owned on its
200,000 issued and outstanding common stock with a par value of P50 per share. At the time of
declaration, the market value of common stock was P60 per share and P70 per share at the time
the stocks were issued. What amount should be charged to the retained earnings account
and credit liability accounts, respectively?
PROBLEM 15
Determination Corporation's board of directors declared a cash dividend on January 2, 2005 in
the amount of P1,600,000 to stockholders of record on January 31, 2005 and payable on March
15, 2005. Selected information were taken from the balance sheet of the company on December
31, 2004:
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CAGAYAN STATE UNIVERSITY
DISCUSSION IN CORPORATION ACCOUNTING
Net Income for 2004 300,000
Accumulated Depletion 1,000,000
Of the total dividends paid of P1,600,000, how much liquidating dividends were included? 3
points
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