CPA REVIEW SCHOOL FOF THE PHILIPPINES
Manila
FINANCIAL ACCOUNTING AND REPORTING VALIX/SIY/VALIX/ESCALA/SANTOS/DELA CRUZ
SHAREHOLDERS’ EQUITY
1. An entity provided the following data at year-end:
Authorized share capital 5,000,000
Unissued share capital 2,000,000
Subscribed share capital 1,000,000
Subscription receivable 400,000
Share premium 500.000
Retained earnings unappropriated 600,000
Retained earnings appropriated 300,000
Revaluation surplus 200,000
Treasury shares, at cost 100,000
What total amount should be reported as shareholders’ equity?
a. 5,100,000
b. 5,500,000
c. 4,900,000
d. 4,800,000
2. During the current year, an entity issued 10,000 ordinary shares with P100 par value and 20,000
convertible preference shares with P200 par value for P8,000,000. On the date of issuance, the
ordinary share is selling at P360 and the preference share is selling at P270. What amount should be
reported as share premium from ordinary shares?
a. 2,600,000
b. 3,000,000
c. 2,200,000
d. 3,800,000
3. An entity reported the following shareholders’ equity at the beginning of the current year:
Share capital, P10 par 5,000,000
Share premium 2,000,000
Retained earnings 1,500,000
During the current year, the entity had the following share transactions:
• Acquired 20,000 treasury shares for P1,000,000
• Sold 15,000 treasury shares at P60 per share.
• Sold the remaining treasury shares at P45 per share.
What amount should be reported as share premium at year-end?
a. 2,125,000
b. 2,150,000
c. 2,000,000
d. 1,975,000
4. At year-end, an entity canceled 5,000 shares of P50 par value held in treasury at an average cost of
P120 per share. Before recording the cancelation of the treasury shares, the entity had the following
shareholders’ equity:
Share capital, 50,000 shares originally issued at P75 2,500,000
Share premium 1,250,000
Retained earnings 1,000,000
Treasury shares, at cost 600,000
What amount should be reported as share capital outstanding at year-end?
a. 2,500,000
b. 1,900,000
c. 2,250,000
d. 2,125,000
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5. An entity had issued 100,000 ordinary shares. Of these, 5,000 shares were held as treasury on January
1. During the current year, transactions involving ordinary shares were:
May 1 2,000 shares of treasury were sold.
Aug 1 10,000 previously unissued shares were sold.
Nov 1 A 3 for 1 share split took effect.
1. At year-end, how many ordinary shares were issued?
a. 330,000
b. 110,000
c. 105,000
d. 315,000
2. At year-end, how many shares are outstanding?
a. 321,000
b. 327,000
c. 315,000
d. 339,000
6. An entity was incorporated on January 1, 2021 with the following authorized capitalization:
Ordinary share capital, 200,000 shares, no par, P100 stated value 20,000,000
Preference share capital, 200 shares, 10% fixed rate, P50 par value 10,000,000
During 2021, the entity issued 150,000 ordinary shares for a total of 18,000,000 and 50,000
preference shares at P60 per share. In addition, on December 15, 2021, subscriptions for 20,000
preference shares were taken at a purchase price of P100. These subscribed shares were paid for on
January 15, 2022. On December 31, 2021, the entity purchased 10,000 ordinary shares at P150 per
share to be held as treasury. Net income for 2021 was P5,000,000. What amount should be reported
as total contributed capital on December 31, 2021?
a. 21,500,000
b. 21,000,000
c. 23,000,000
d. 28,000,000
7. An entity was organized on January 1, 2021. On that date, it issued 400,000 ordinary shares of P10
par value at P15 per share. The entity was authorized to issue 500,000 ordinary shares. During the
period January 1, 2021 through December 31, 2022, the entity reported net income of P2,500,000
and paid cash dividend of P500,000. On January 5, 2022, the entity purchased 20,000 ordinary shares
at P20 per share. On December 31, 2022, 15,000 treasury shares were sold at P40 per share and the
remaining treasury shares were retired. The entity used the cost method of accounting for treasury
shares. What amount should be reported as total stockholders’ equity on December 31, 2022?
a. 8,200,000
b. 8,125,000
c. 8,100,000
d. 8,275,000
8. During the year, an entity issued for P110 per share, 15,000 convertible preference shares of P100
par value. One preference share may be converted into three ordinary shares of P25 par value at the
option of the preference shareholder.
At the year-end, all of the preference shares were converted into ordinary shares. The market value
of the ordinary share at the conversion date was P40. What amount should be credited to share
premium as a result of conversion?
a. 375,000
b. 525,000
c. 150,000
d. 0
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