Accounting for Partnership and Corporation SOLMAN (Baysa & Lupisan, 2014) Chapter 9 PDF

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CHAPTER 9 Operations, Dividends, Book Value and Earnings per Share E 9-1 Contributed Capital: 10% Preference Share Capital, P100 par, cumulative, 10,000 shares authorized, 4,000 shares issued and outstanding Ordinary Share Capital, P20 par, 100,000 shares authorized, 50,000 shares issued and outstanding Ordinary Share Capital Subscribed – 10,000 shares Preference Share Premium Ordinary Share Premium Total Contributed Capital Retained Earnings Total Shareholders’ Equity

P 400,000 1,000,000 200,000 150,000 200,000 P1,950,000 250,000 P2,200,000

E 9-2 Contributed Capital: 10% Preference Share Capital, P40 par, 40,000 shares authorized, 20,000 shares issued and outstanding Preference Share Capital Subscribed P40,000 Less PSC Subscription Receivable 14,000 Ordinary Share Capital, P10 stated value, 500,000 shares authorized, 200,000 shares issued and outstanding Paid-in Capital in Excess of Par – Preference Shares Paid-in Capital in Excess of Stated Value – Ordinary Shares Total Contributed Capital Retained Earnings Total Shareholders’ Equity E 9-3 Mar. 1

Apr. 15

Sept. 1

30

E 9-4 Apr. 1

Retained Earnings Dividends Payable 40,000 sh x P10 = P400,000

400,000

Dividends Payable Cash

400,000

Retained Earnings Dividends Payable 40,000 sh x P20

800,000

Dividends Payable Cash

800,000

Retained Earnings Dividends Payable

200,000

P800,000 26,000 2,000,000 120,000 100,000 P3,046,000 400,000 P3,446,000

400,000

400,000

800,000

800,000

200,000

APC – Chapter 9 (2007 edition)

page 2

100,000 sh x P2 May 2

June 1

July 15

Dividends Payable Cash

200,000

Retained Earnings Stock Dividends Distributable PIC from Stock Dividends 100,000 sh x 10% x P60

600,000

Stock Dividends Distributable Ordinary Share Capital

500,000

E 9-5 1. Retained Earnings Stock Dividends Distributable PIC from Stock Dividends 500,000 sh x 15% x P25 = P1,875,000 500,000 sh x 15% x P10 = P 750,000 Stock Dividends Distributable Ordinary Share Capital 2.

July

Oct.

500,000 100,000

500,000

1,875,000 750,000 1,125,000

750,000 750,000

Retained Earnings Stock Dividends Distributable 500,000 sh x 50% x P10 = P2,500,000

2,500,000

Stock Dividends Distributable Ordinary Share Capital

2,500,000

E 9-6 Mar. 15

Apr.

200,000

15

15

15

2,500,000

2,500,000

Retained Earnings Dividends Payable 2,000 sh x P5 = P10,000

10,000

Dividends Payable Cash

10,000

Retained Earnings Property Dividends Payable 2,000 sh x P20

40,000

Property Dividends Payable Investment in Pentagon Corp. Stocks

40,000

Retained Earnings Stock Dividends Distributable 2,000 sh x 30% x P25

15,000

10,000

10,000

40,000

40,000

15,000

APC – Chapter 9 (2007 edition)

Dec.

1

page 3

Stock Dividends Distributable Ordinary Share Capital

15,000 15,000

E 9-7 Annual PSC dividend requirement – 100,000 sh x P100 x 12% = P1,200,000 1. Preference Ordinary Total Dividends per share: Preference Ordinary 2. 2007 Dividends in arrears – 2 yrs. Current dividends Total Dividends per share 2008 Dividends in arrears Current dividends Balance – Ordinary Total Dividends per share 2009 Current dividends Balance – Ordinary Total Dividends per share

2007 P1,200,000 1,300,000 P2,500,000

2008 P1,200,000 2,300,000 P3,500,000

2009 P1,200,000 5,300,000 P6,500,000

P12.00 P 2.60

P12.00 P 4.60

P12.00 P10.60

Preference

Ordinary

Total

P2,400,000 100,000 P2,500,000

P ----------P -----------

P2,400,000 100,000 P2,500,000

P25.00

P –0--

P1,100,000 1,200,000 P2,300,000 P23.00

P1,200,000 P1,200,000 P 2.40

P1,200,000 P1,200,000

P1,100,000 1,200,000 1,200,000 P3,500,000

P5,300,000 P5,300,000

P1,200,000 5,300,000 P6,500,000

P12.00

P 10.60

Preference

Ordinary

Total

P1,200,000

P600,000

P1,800,000

P1,666,667

233,333 P833,333

466,667 233,333 P2,500,000

P16.67

P1.67

3. 2007 Regular dividends Balance –P700,000 Preference – 10/15 Ordinary – 5/15 Total Dividends per share

466,667

APC – Chapter 9 (2007 edition)

2008 Regular dividends Balance –P1,700,000 Preference – 10/15 Ordinary – 5/15 Total Dividends per share 2009 Regular dividends Balance –P4,700,000 Preference – 10/15 Ordinary – 5/15 Total Dividends per share

page 4

P1,200,000

P 600,000

P1,800,000

P2,333,333

566,667 P1,166,667

1,133,333 566,667 P3,500,000

P23.33

P2.33

P1,200,000

P 600,000

P1,800,000

1,566,667 P2,166,667

3,133,333 1,566,667 P6,500,000

1,133,333

3,133,333 P4,333,333 P43.33

P4.33

Preference

Ordinary

Total

P2,400,000 100,000 P2,500,000

P ----------P -----------

P2,400,000 100,000 P2,500,000

P25.00

P –0--

4. 2007 Dividends in arrears – 2 yrs. Current dividends Total Dividends per share 2008 Dividends in arrears Regular dividends Balance – P600,000 Preference – 10/15 Ordinary – 5/15 Total Dividends per share 2009 Regular dividends Balance – P4,700,000 Preference – 10/15 Ordinary – 5/15 Total Dividends per share

P1,100,000 1,200,000

P 600,000

P1,100,000 1,800,000

P2,700,000

200,000 P 800,000

400,000 200,000 P3,500,000

P27.00

P1.60

P1,200,000

P 600,000

P1,800,000

P4,333,333

1,566,667 P2,166,667

3,133,333 1,566,667 P6,500,000

P43.33

P4.33

400,000

3,133,333

5. Preference

Ordinary

Total

P1,200,000

P600,000

P1,800,000

2007 Regular dividends Balance –P700,000

APC – Chapter 9 (2007 edition)

page 5

Preference – 10/15 Ordinary – 5/15 Total

466,667 P1,666,667

233,333 P833,333

Dividends per share

P16.67

P1.67

Regular dividends Balance –P1,700,000 Preference Ordinary Total

P1,200,000

Dividends per share

P20.00

Regular dividends Balance –P4,700,000 Preference Ordinary Total

P1,200,000

Dividends per share

P20.00

466,667 233,333 P2,500,000

2008 P 600,000

P1,800,000

900,000 P1,500,000

800,000 900,000 P3,500,000

800,000 P2,000,000

P3.00

2009

P2,000,000

Total Shareholders’ Equity Equity identified with preference shares (10,000 sh x P120) Equity identified with ordinary shares BV/share: PS – P120.00;

P1,800,000

3,900,000 P4,500,000

800,000 3,900,000 P6,500,000

800,000

E 9-8 1. P2,500,000 / 200,000 shares 2.

P 600,000

P9.00

P12.50 P2,500,000 1,200,000 P1,300,000

OS – P13.00

E 9-9 a. b. c. d. e.

P10,000/60,000 = P.17 P70,000/60,000 = P1.17 P90,000/60,000 = P1.50 P150,000/60,000 = P2.50 P180,000/60,000 = P3.00

E 9-10 Profit Less earnings identified with preference share capital (20,000 sh x P100 x 10%) Earnings identified with ordinary shares Earnings per share P250,000/300,000 = P.83

P450,000 200,000 P250,000

APC – Chapter 9 (2007 edition)

P 9-1 1. 2009 Jan. 2

Mar. 2

Mar. 31

Dec. 31

31

2010 Jan. 31

Feb. 14

14

Mar. 15

15

Dec. 31

page 6

Cash Ordinary Share Capital Ordinary Share Premium 125,000 sh x P15

1,875,000

Cash (62,500 sh x P20) Ordinary Share Capital Ordinary Share Premium

1,250,000

Land Building Ordinary Share Capital Ordinary Share Premium

125,000 312,500

Income Summary Retained Earnings

750,000

Retained Earnings Dividends Payable 125,000 + 62,500 + 25,000 = 212,500 sh x P2.50

531,250

Dividends Payable Cash

531,250

OSC Subscription Receivable (50,000 x P25) OSC Subscribed Ordinary Share Premium

1,250,000 625,000

625,000 625,000

250,000 187,500

750,000

531,250

531,250 1,250,000 500,000 750,000

Cash OSC Subscription Receivable P1,250,000 x 40%

500,000

Cash OSC Subscription Receivable P1,250,000 x 60%

750,000

OSC Subscribed Ordinary Share Capital

500,000

Income Summary Retained Earnings

500,000

750,000

500,000 1,000,000 1,000,000

APC – Chapter 9 (2007 edition)

31

31

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Retained Earnings Dividends Payable 212,500 + 50,000 = 262,500 x P1

262,500

Retained Earnings Stock Dividends Distributable PIC from Stock Dividend 262,500 x 10% x P25 = 262,500

656,250

262,500

262,500 393,750

2. Contributed Capital: Ordinary share Capital, P10 par, 500,000 shares authorized, 212,500 shares issued and outstanding Ordinary Share Premium Total Contributed Capital Retained Earnings Total Shareholders’ Equity 3.

P2,125,000 1,437,500 P3,562,500 218,750 P3,781,250

BCD Corporation Statement of Changes in Shareholders’ Equity For the Year Ended December 31, 2010 Ordinary Share Capital P2,125,000 500,000

Balances, January 1, 2010 Subscription & issuance of 5,000 shares@P25 Declaration of cash dividends Declaration of 10% stock Dividends Profit for 2010 Balances, December 31, 2010

Ordinary Share Premium P1,437,500 750,000

262,500

P 2,887,500

P2,187,500

PIC from Stock Dividend

Retained Earnings P 218,750

Total P3,781.250 1,250,000

( 262,500) ( 656,250)

( 262,500)

P393,750

P393,750

1,000,000 P 300,000

1,000,000 P5,768,750

P 9-2 MMM Corporation Statement of Changes in Shareholders’ Equity For the Two Years Ending December 31, 2010 Ordinary Share Capital

Ordinary Share Premium

Issued 120,000 shares @ P24 Loss for the year Balances, December 31

P2,400,000

P 480,000

P2,400,000

P 480,000

Issued 80,000 shares @ P30 Profit for the year

1,600,000

800,000

Retained Earnings

Total

2009: (P300,000) (P300,000)

P2,880,000 ( 300,000) P2,580,000

800,000

2,400,000 800,000

2010:

APC – Chapter 9 (2007 edition)

page 8

Balances, December 31

P4,000,000

P1,280,000

P500,000

P5,780,000

VVV Inc. Statement of Changes in Shareholders’ Equity For the Two Years Ending December 31, 2010 5% Preference Share 2009: Issued 6,000 PS @ P120 Issued 200,000 ordinary shares Profit for the year Dividends: PS – P600,000 x 5% OS – 200,000 shares x P.25 Balances, December 31 2010: Issued 5,000 PS @ P130 Issued 100,000 OS @ P10 Profit for the year Dividends: PS – 1,100,000 x 5% OS - 300,000 shares x P.50 Balances, December 31

Ordinary Share

P 600,000

Preference Share Premium

Retained Earnings

Total

P 240,000

P 720,000 1,400,000 240,000

( 30,000) ( 50,000) P 160,000

( 30,000) ( 50,000) P2,280,000

P 120,000 P1,400,000

P 600,000

P1,400,000

500,000

P 120,000 150,000

1,000,000 600,000

P1,100,000

P2,400,000

P 270,000

( 55,000) ( 150,000) P 555,000

650,000 1,000,000 600,000 ( 55,000) ( 150,000) P4,325,000

MMM Corp. Shareholders’ Equity December 31, 2010 Contributed Capital: Ordinary Share Capital, P20 par, 200,000 shares authorized, all issued and outstanding Ordinary Share Premium Retained Earnings Total Shareholders’ Equity

P4,000,000 1,280,000

P5,280,000 500,000 P5,780,000

VVV Inc. Shareholders’ Equity December 31, 2010 Contributed Capital: 5% Preference Share Capital, P100 par, 200,000 shares authorized, 11,000 shares issued and outstanding Ordinary Share Capital, no par, no Stated Value 500,000 shares authorized, 300,000 shares issued and outstanding Preference Share Premium Retained Earnings Total Shareholders’ Equity

P1,100,000

2,400,000 270,000

P3,770,000 555,000 P4,325,000

APC – Chapter 9 (2007 edition)

page 9

P 9-3 DEF Corporation Balance Sheet December 31, 2009 Assets Current Assets: Cash Accounts Receivable Less Allowance for Doubtful Accounts Merchandise Inventory Store Supplies Office Supplies Prepaid Insurance Total Current Assets Noncurrent Assets: Land Office Equipment, net of Accumulated Depreciation of P45,000 Store Equipment, net of Accumulated Depreciation of P75,000 Total assets

P 200,000 P 100,000 10,000

P1,000,000 105,000 175,000

90,000 210,000 5,000 4,000 12,000 P 521,000

1,280,000 P1,801,000

Liabilities Current Liabilities: Accounts Payable Income Tax Payable Salaries Payable Total Liabilities

P

75,000 163,100 12,000 P 250,100

Shareholders’ Equity Contributed Capital: Ordinary Share Capital, P20 par, 50,000 shares issued and outstanding Ordinary Share Capital Total Contributed Capital Retained Earnings Total Shareholders’ Equity Total Liabilities and Shareholders’ Equity

Balances, Jan. 1 Issuance of CS Declaration and dist.

P1,000,000 100,000 P1,100,000 450,900

DEF Corporation Statement of Changes in Shareholders’ Equity For the Year Ended December 31, 2009 Ordinary Ordinary Retained Share Capital Share Earnings Premium P 980,000 P 95,000 P228,000 20,000 5,000

1,550,900 P1,801,000

Total P1,303,000 25,000

APC – Chapter 9 (2007 edition)

of dividends Profit for 2009 Balances, Dec. 31

page 10

P1,000,000

( 80,000) 302,900 P450,900

P100,000

DEF Corporation Income Statement For the Year Ended December 31, 2009 Sales (net of discounts of P50,000) Cost of Goods Sold: Merchandise Inventory, Jan. 1 Purchases (net of ret. and allow. of P100,000) Cost of Goods available for Sale Less Merchandise Inventory, Dec. 31 Gross Profit Selling Expenses: Sales Salaries Advertising Delivery Store Supplies Depreciation – Store Equipment Miscellaneous Administrative Expenses: Office Salaries Light and Power Insurance Depreciation – Office Equipment Office Supplies Miscellaneous Profit before Income Tax Income Tax (35%) Profit

P2,450,000 P 150,000 1,300,000 P1,450,000 210,000

P258,000 75,000 50,000 10,000 25,000 20,000 P189,000 60,000 18,000 15,000 6,000 18,000

Earnings per share P302,900/ 50,000 shares 3.

( 80,000) 302,900 P1,550,900

1,240,000 P1,210,000

(438,000)

(306,000) P 466,000 163,100 P 302,900 P6.058

Adjusting Entries Merchandise Inventory Income Summary

210,000 210,000

Income Summary Merchandise Inventory

Store Supplies Expense Office Supplies Expense Store Supplies Office Supplies

150,000 150,000

10,000 6,000 10,000 6,000

APC – Chapter 9 (2007 edition)

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Store Salaries Office Salaries Salaries Payable

8,000 4,000 12,000

Depreciation Expense – Store Equipment Depreciation Expense – Office Equipment Accumulated Depreciation – Store Equipment Accumulated Depreciation – Office Equipment

25,000 15,000

Insurance Expense Prepaid Insurance

18,000

Income Tax Income Tax Payable

163,100

25,000 15,000

18,000

163,100

Closing Entries Sales Purchases Returns and Allowances Sales Discount Purchases Sales Salaries Advertising Delivery Store Supplies Expense Depreciation Expense – Store Equipment Miscellaneous Expenses Office Salaries Light and Power Insurance Depreciation Expense – Office Equipment Office Supplies Expense Miscellaneous Administrative Expenses Income Taxes Income Summary

2,500,000 100,000 50,000 1,400,000 258,000 75,000 50,000 10,000 25,000 20,000 189,000 60,000 18,000 15,000 6,000 18,000 163,100 242,900

Income Summary Retained Earnings

302,900 302,900

P9-4 2007 Regular dividend Balance – P150,000 PS – 2/3; OS –1/3 Total Dividends per share 2008

PS

OS

TOTAL

P200,000

P100,000

P300,000

100,000 P300,000 P15.00 PS

50,000 P150,000 P3.00 OS

150,000 P450,000 TOTAL

APC – Chapter 9 (2007 edition)

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Regular dividend Balance – P450,000 PS – 2/3; OS –1/3 Total Dividends per share 2009 Regular dividend Balance – P1,400,000 PS – 2/3; OS –1/3 Total Dividends per share 2.

P200,000

P100,000

P300,000

300,000 P500,000 P25.00 PS

150,000 P250,000 P5.00 OS

450,000 P750,000

P 200,000

P100,000

P 300,000

933,333 P1,133,333 P56.67

466,667 P566,667 P11.33

1,400,000 P1,700,000

PS 2007 Dividends in arrears Current dividends Total Dividends per share 2008 Dividends in arrears Current dividends Balance – to Ordinary Total Dividends per share 2009 Current dividends Balance – to ordinary Total Dividends per share 3. 2007 Dividends in arrears Regular dividends Balance – P90,000 PS – 10/15; OS 5/15 Total Dividends per share 2008 Regular dividends Balance – P630,000 PS – 10/15; OS 5/15 Total Dividends per share 2009 Regular dividends

TOTAL

OS

TOTAL

P400,000 50,000 P450,000 P22.50

----P –0-P—0--

P400,000 50,000 P450,000

P150,000 200,000

----

P150,000 200,000 400,000 P750,000

P350,000 P17.50

P400,000 P400,000 P8.00

P200,000 P200,000 P10.00

P1,500,000 P1,500,000 P30.00

PS P240,000 80,000

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