APC Chapter 9 - APC Solman PDF

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CHAPTER 9 Operations, Dividends, Book Value and Earnings per Share E Contributed Capital: Preference Share Capital, P100 par, cumulative, shares authorized, shares issued and outstanding Ordinary Share Capital, P20 par, shares authorized, shares issued and outstanding Ordinary Share Capital Subscrib...

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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 100,000 sh x P2

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 (2014 edition)

May 2

June

1

July 15

Dividends Payable Cash

200,000

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

600,000

Share Capital Dividends Distributable Ordinary Share Capital

500,000

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

July

Oct.

Dec.

200,000

500,000 100,000

500,000

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

750,000 750,000

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

2,500,000

Share Capital Dividends Distributable Ordinary Share Capital

2,500,000

E 9-6 Mar. 15

Apr.

page 2

15

15

15

1

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 Share Capital Dividends Distributable 2,000 sh x 30% x P25

15,000

Share Capital Dividends Distributable

15,000

Ordinary Share Capital

10,000

10,000

40,000

40,000

15,000

15,000

APC – Chapter 9 (2014 edition)

page 3

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. 2012 Dividends in arrears – 2 yrs. Current dividends Total Dividends per share 2013 Dividends in arrears Current dividends Balance – Ordinary Total Dividends per share 2014 Current dividends Balance – Ordinary Total Dividends per share

2012 P1,200,000 1,300,000 P2,500,000

2013 P1,200,000 2,300,000 P3,500,000

2014 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

P1,200,000 P1,200,000

P23.00

P 2.40

P1,200,000 P1,200,000

P5,300,000 P5,300,000

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

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

233,333 P833,333

466,667 233,333 P2,500,000

3. 2012 Regular dividends Balance –P700,000 Preference – 10/15 Ordinary – 5/15 Total Dividends per share

466,667 P1,666,667 P16.67

P1.67

APC – Chapter 9 (2014 edition)

2013 Regular dividends Balance –P1,700,000 Preference – 10/15 Ordinary – 5/15 Total Dividends per share 2014 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. 2012 Dividends in arrears – 2 yrs. Current dividends Total Dividends per share 2013 Dividends in arrears Regular dividends Balance – P600,000 Preference – 10/15 Ordinary – 5/15 Total Dividends per share 2014 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

200,000 P 800,000

400,000 200,000 P3,500,000

400,000 P2,700,000 P27.00 P1,200,000

P1.60 P 600,000

P1,800,000

1,566,667 P2,166,667

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

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

P4.33

APC – Chapter 9 (2014 edition)

page 5

5. Preference

Ordinary

Total

P1,200,000

P600,000

P1,800,000 466,667 233,333 P2,500,000

2012 Regular dividends Balance –P700,000 Preference – 10/15 Ordinary – 5/15 Total

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

P2,000,000

Dividends per share

P20.00

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

P1,200,000

P2,000,000

Dividends per share

P20.00

466,667

2013 P 600,000

P1,800,000

900,000 P1,500,000

800,000 900,000 P3,500,000

800,000

P3.00

2014

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

3,900,000 P4,500,000

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

P9.00

P25.00

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

800,000

E 9-8 1. P5,000,000 / 200,000 shares 2.

P 600,000

OS – P3,800,000/100,000 = P38.00

P5,000,000 1,200,000 P3,800,000

APC – Chapter 9 (2014 edition)

page 6

E 9-10 Profit Less earnings identified with preference share capital (20,000 sh x P100 x 10%) Earnings identified with ordinary shares

P750,000 200,000 P550,000

Earnings per share P550,000/300,000 = P1.67 P 9-1 1. 2014 Jan. 2

Mar. 2

Mar.

Dec.

31

31

31

2015 Jan. 31

Feb.

14

14

Mar. 15

15

Cash Ordinary Share Capital Ordinary Share Premium 125,000 sh x P25

3,125,000

Cash (62,500 sh x P30) Ordinary Share Capital Ordinary Share Premium

1,875,000

Land Building Ordinary Share Capital Ordinary Share Premium

300,000 500,000

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

2,500,000 625,000

1,250,000 625,000

500,000 300,000

750,000

531,250

531,250

OSC Subscription Receivable (50,000 x P50) OSC Subscribed (50,000 x P20) Ordinary Share Premium

2,500,000

Cash OSC Subscription Receivable P2,500,000 x 40%

1,000,000

Cash OSC Subscription Receivable P2,500,000 x 60%

1,500,000

OSC Subscribed Ordinary Share Capital

1,000,000

1,000,000 1,500,000

1.000,000

1,500,000

1,000,000

APC – Chapter 9 (2014 edition)

Dec.

31

31

31

page 7

Income Summary Retained Earnings

2,000,000 2,000,000

Retained Earnings Dividends Payable 212,500 + 50,000 = 262,500 x P2

525,000

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

656,250

525,000

525,000 131,250

2. Contributed Capital: Ordinary share Capital, P20 par, 500,000 shares authorized, 212,500 shares issued and outstanding Ordinary Share Premium Total Contributed Capital Retained Earnings Total Shareholders’ Equity 3.

P4,250,000 1,550,000 P5,800,000 218,750 P6,018,750

BCD Corporation Statement of Changes in Shareholders’ Equity For the Year Ended December 31, 2014

Balances, January 1, 2014 Issuance of 125,000 shares@P25 Issuance of 62,500 shares@P30 Issuance of 25,000 shares in exchange for land and building Profit for 2014 Declaration of cash dividends of P2.50 Balances, December 31, 2014

Ordinary Share Capital P 2,500,000 1,250,000

Ordinary Share Premium P 625,000 625,000

500,000

300,000

P4,250,000

PIC from Stock Dividend

Retained Earnings P -

750,000 ( 531,250) p 218,750

P1,550,000

Total P P3,125,000 1,875,000 800,000 750,000 ( 531,250) P6,018,750

P 9-2 MMM Corporation Statement of Changes in Shareholders’ Equity For the Two Years Ending December 31, 2014 Ordinary Ordinary Share Share Capital Premium

Retained Earnings

Total

2013: 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 Balances, December 31

1,600,000

800,000

(P300,000) (P300,000)

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

800,000 P500,000

2,400,000 800,000 P5,780,000

2014:

P4,000,000

P1,280,000

APC – Chapter 9 (2014 edition)

page 8

VVV Inc. Statement of Changes in Shareholders’ Equity For the Two Years Ending December 31, 2014 5% Preference Share 2013: 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 2014: 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

650,000 1,000,000 600,000

1,000,000 600,000

P1,100,000

P2,400,000

P 270,000

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

( 55,000) ( 150,000) P4,325,000

MMM Corp. Shareholders’ Equity December 31, 2014 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, 2014 Contributed Capital: 5% Preference Share Capital, P100 par, 200,000 shares authorized, 11,000 shares issued and outstanding P1,100,000 Ordinary Share Capital, no par, no Stated Value 500,000 shares authorized, 300,000 shares issued and outstanding 2,400,000 Preference Share Premium 270,000 Retained Earnings Total Shareholders’ Equity

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

APC – Chapter 9 (2014 edition)

page 9

P 9-3 DEF Corporation Balance Sheet December 31, 2014 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 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

P

75,000 139,800 12,000 P 226,800

P1,000,000 100,000 P1,100,000 474,200

DEF Corporation Statement of Changes in Shareholders’ Equity For the Year Ended December 31, 2010 Ordinary Ordinary Retained Share Capital Share Premium Earnings Balances, Jan. 1 P 980,000 P 95,000 P228,000 Issuance of CS 20,000 5,000 Declaration and dist. of dividends ( 80,000) Profit for 2014 326,200 Balances, Dec. 31 P1,000,000 P100,000 P474,200

1,574,200 P1,801,000

Total P1,303,000 25,000 ( 80,000) 326,200 P1,574,200

APC – Chapter 9 (2014 edition)

DEF Corporation Income Statement For the Year Ended December 31, 2014 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 (30%) Profit

page 10

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 P326,200/ 50,000 shares 3.

1,240,000 P1,210,000

(438,000)

(306,000) P 466,000 139,800 P 326,200 P6.524

Adjusting Entries Merchandise Inventory Income Summary

210,000

Income Summary Merchandise Inventory

150,000

210,000

150,000

Store Supplies Expense Office Supplies Expense Store Supplies Office Supplies

10,000 6,000

Store Salaries Office Salaries Salaries Payable

8,000 4,000

10,000 6,000

12,000

APC – Chapter 9 (2014 edition)

page 11

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

139,800

25,000 15,000

18,000

139,800

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 18,000 139,800 266,200

Income Summary Retained Earnings

326,200 326,200

P9-4 2012 Regular dividend Balance – P150,000 PS – 2/3; OS –1/3 Total Dividends per share 2013 Regular dividend Balance – P450,000 PS – 2/3; OS –1/3 Total Dividends per share

PS

OS

TOTAL

P200,000

P100,000

P300,000

100,000 P300,000 P15.00

50,000 P150,000 P3.00

150,000 P450,000

P200,000

P100,000

P300,000

300,000 P500,000 P25.00

150,000 P250,000 P5.00

450,000 P750,000

APC – Chapter 9 (2014 edition)

page 12

PS 2014 Regular dividend Balance – P1,400,000 PS – 2/3; OS –1/3 Total Dividends per share

OS

TOTAL

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

2. PS 2012 Dividends in arrears Current dividends Total Dividends per share 2013 Dividends in arrears Current dividends Balance – to Ordinary Total Dividends per share 2014 Current dividends Balance – to ordinary Total Dividends per share 3. 2012 Dividends in arrears Regular dividends Balance – P90,000 PS – 10/15; OS 5/15 Total Dividends per share 2013 Regular dividends Balance – P630,000 PS – 10/15; OS 5/15 Total Dividends per share 2014 Regular dividends Balance – P1,580,000 PS – 10/15; OS 5/15 Total Dividends per share

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