FINAL

OUTPUT

INTERMEDIATE
ACCOUNTING 2

NAME: (SURNAME, FIRST NAME, MIDDLE INITIAL)

ABCDE Corporation began operation on January 1, 2020. The company was authorized to issue 60,000
shares of P10 par value common stock and 120,000 shares of 10% P100 par value convertible preferred
stock.
In correction with your examination of the company’s financial statements, your noted the following
transactions involving stockholders’ equity during 2020:

Jan. 1 Issued 1,500 shares of common stock to the corporation promoters in exchange for
property valued at P510, 000 and services valued at P210,00. The property costs P270,00
3 years ago and was carried on the promoters’ books at P150,000.

Jan. 31 Issued 30,000 shares of convertible preferred stock at P150 per share. Each share can be
converted to five shares of common stock. The corporation paid P225,000 to an agent for
selling the shares.

Feb. 15 Sold 9,000 shares of common stock at P390 per share. The corporation paid issue costs of
P75,000.

May 30 Received subscriptions for 12,000 shares of common stock at P450 per share.

Aug.30 Issued 2,100 share of common stock and 4,200 shares of preferred stock in exchange for
a building with a fair market value of P1,530,000. The building was originally purchased
for P1,140,000 by the investors and has a book value of P660,000. In addition, 1,800
shares of common stock were sold for P720,000 cash.

Nov. 15 Payments in full for half of the subscriptions and partial payments for the rest of the
subscriptions were received. Total cash received was P4,200,000. Shares of stock were
issued for the fully paid subscriptions.

Dec. 1 Declared a cash dividend of P10 per share on preferred stock, payable on December 31 to
stockholders of record on December 15, and 20 per share cash dividend on common
stock, payable on January 15, 2021 to stockholders of record on December 15.

Dec. 31 Paid the preferred stock dividend.

Net income for the first year of operation was P1,800,000.

Based on the above and the result of your examination, determine the following as of December 31, 2020:
1. Common stock
2. Paid-in capital in excess of par value of preferred stock
3. Paid-in capital in excess of par value of common stock
4. Retained earnings
5. Total stockholders’ equity

ABC Corp. has two classes of share capital outstanding: 12%, P100 par value preference share and P50
par value ordinary share. Balances on
January 1, 2020 were:
Preference share capital – 5,000 shares P500,000
Ordinary share capital – 50,000 shares 2,500,000
Share premium – PS 200,000
Share premium – OS 2,000,000
Accumulated profits 4,000,000

The following data summarize the transactions for 2020:

I. Issue of 20,000 shares of ordinary at P50 per share on January 20.
II. Purchase of 5,000 of the company’s own ordinary shares from stockholders at P60 per share on
February 20.
III. A 2 for 1 share split on the ordinary on April 1.
IV. 20% stock dividend to ordinary shares was declared on April 30 and distributed on May 20. The
prevailing fair value of share on this date was P60 per share.
V. Reissuance of 3,000 reacquired shares at P40 per share on May 3.
VI. Donation of 15,000 shares of ordinary by shareholders on June 5.
VII. Reissuance of 10,000 donated stocks at P40 per share on July 1.
VIII. Declaration of P12 cash dividends to preference shares and P3 per share dividends to ordinary on
November 30 to stockholders as of December 20 payable on January 30 of the next year.
IX. The company appropriated 20% of the adjusted unappropriated accumulated profits (after other
appropriations) for plant expansion. The net income for the year after adjustments was
P1,200,000 and the Unrealized holding loss from remeasurement of the company’s available for
sale securities was at P200,000.

Requirements:
6. What is the adjusted balance of the Ordinary share account on December 31, 2020?
7. How much is the credit to share premium account from the reissuance of shares on May 3?
8. The debit to the retained earnings account related to the declaration of stock dividends in April 30
is
9. The entry to record the transaction on June 5 requires a credit to:
10. What is the total Additional Paid-in Capital as of December 31, 2020?
11. What is the total Contributed Capital as of December 31, 2020
12. How much is the total dividends payable to Ordinary shareholders?
13. What is the balance of the Accumulated profits, unappropriated account at the end of 2020?
14. How much is the total Accumulated profits, appropriated?
15. What is the total Stockholders’ equity as of December 31, 2020?

On January 1, Year 1 Miriam Company borrowed P70,000 cash by signing a 9% installment note that is to
be repaid with four annual year-end payments of P21,607, the first of which is due on December 31, Year
1

16. Prepare the company's journal entry to record the note's issuance.
17. Prepare the journal entries to record the first and second installment payments.

18. An example of an item which is not a liability is

a. dividends payable in stock.
b. advances from customers on contracts.
c. accrued estimated warranty costs.
d. the portion of long-term debt due within one year.

19. The covenants and other terms of the agreement between the issuer of bonds and the lender are
set forth in the
a. bond indenture.
b. bond debenture.
c. registered bond.
d. bond coupon.
20. The term used for bonds that are unsecured as to principal is
a. junk bonds.
b. debenture bonds.
c. indebenture bonds.
d. callable bonds.

21. Bonds for which the owners' names are not registered with the issuing corporation are called
a. bearer bonds.
b. term bonds.
c. debenture bonds.
d. secured bonds.

22. Bonds that pay no interest unless the issuing company is profitable are called
a. collateral trust bonds.
b. debenture bonds.
c. revenue bonds.
d. income bonds.
 23. If bonds are issued initially at a premium and the effective-interest method of amortization is
used, interest expense in the earlier years will be
a. greater than if the straight-line method were used.
b. greater than the amount of the interest payments.
c. the same as if the straight-line method were used.
d. less than if the straight-line method were used.

24. The interest rate written in the terms of the bond indenture is known as the
a. coupon rate.
b. nominal rate.
c. stated rate.
d. coupon rate, nominal rate, or stated rate.

25. The rate of interest actually earned by bondholders is called the

a. stated rate.
b. yield rate.
c. effective rate.
d. effective, yield, or market rate.

Use the following information for questions 26 and 27:

Fox Co. issued P100,000 of ten-year, 10% bonds that pay interest semiannually. The bonds are sold to
yield 8%.

26. One step in calculating the issue price of the bonds is to multiply the principal by the table value
for
a. 10 periods and 10% from the present value of 1 table.
b. 20 periods and 5% from the present value of 1 table.
c. 10 periods and 8% from the present value of 1 table.
d. 20 periods and 4% from the present value of 1 table.

27. Another step in calculating the issue price of the bonds is to

a. multiply P10,000 by the table value for 10 periods and 10% from the present value of an
annuity table.
b. multiply P10,000 by the table value for 20 periods and 5% from the present value of an
annuity table.
c. multiply P10,000 by the table value for 20 periods and 4% from the present value of an
annuity table.
d. none of these.

Use the following information for questions 28 through 30:

On January 1, 2012, Ellison Co. issued eight-year bonds with a face value of P2,000,000 and a stated
interest rate of 6%, payable semiannually on June 30 and December 31. The bonds were sold to yield 8%.
Table values are:

Present value of 1 for 8 periods at 6% ......................................... .627

Present value of 1 for 8 periods at 8% ......................................... .540
Present value of 1 for 16 periods at 3% ....................................... .623
Present value of 1 for 16 periods at 4% ....................................... .534
Present value of annuity for 8 periods at 6%................................ 6.210
Present value of annuity for 8 periods at 8%................................ 5.747
Present value of annuity for 16 periods at 3%.............................. 12.561
Present value of annuity for 16 periods at 4%.............................. 11.652

28. The present value of the principal is

29. The present value of the interest is

30. The issue price of the bonds is

31. Downing Company issues P3,000,000, 6%, 5-year bonds dated January 1, 2012 on January 1,
2012. The bonds pay interest semiannually on June 30 and December 31. The bonds are issued to
yield 5%. What are the proceeds from the bond issue?

2.5% 3.0% 5.0% 6.0%

Present value of a single sum for 5 periods .88385 .86261 .78353 .74726
Present value of a single sum for 10 periods .78120 .74409 .61391 .55839
Present value of an annuity for 5 periods 4.64583 4.57971 4.32948 4.21236
Present value of an annuity for 10 periods 8.75206 8.53020 7.72173 7.36009

32. Feller Company issues P10,000,000 of 10-year, 9% bonds on March 1, 2012 at 97 plus accrued
interest. The bonds are dated January 1, 2012, and pay interest on June 30 and December 31.
What is the total cash received on the issue date?

33. Everhart Company issues P15,000,000, 6%, 5-year bonds dated January 1, 2012 on January 1,
2012. The bonds pays interest semiannually on June 30 and December 31. The bonds are issued
to yield 5%. What are the proceeds from the bond issue?

2.5% 3.0% 5.0% 6.0%

Present value of a single sum for 5 periods .88385 .86261 .78353 .74726
Present value of a single sum for 10 periods .78120 .74409 .61391 .55839
Present value of an annuity for 5 periods 4.64583 4.57971 4.32948 4.21236
Present value of an annuity for 10 periods 8.75206 8.53020 7.72173 7.36009

34. Farmer Company issues P20,000,000 of 10-year, 9% bonds on March 1, 2012 at 97 plus accrued
interest. The bonds are dated January 1, 2012, and pay interest on June 30 and December 31.
What is the total cash received on the issue date?

35. A company issues P15,000,000, 7.8%, 20-year bonds to yield 8% on January 1, 2012. Interest is
paid on June 30 and December 31. The proceeds from the bonds are P14,703,109. Using
effective-interest amortization, what will the carrying value of the bonds be on the December 31,
2012 balance sheet?

36. A company issues P15,000,000, 7.8%, 20-year bonds to yield 8% on January 1, 2011. Interest is
paid on June 30 and December 31. The proceeds from the bonds are P14,703,109. Using straight-
line amortization, what is the carrying value of the bonds on December 31, 2013?

37. A company issues P15,000,000, 7.8%, 20-year bonds to yield 8% on January 1, 2012. Interest is
paid on June 30 and December 31. The proceeds from the bonds are P14,703,109. What is
interest expense for 2013, using straight-line amortization?

38. A company issues P10,000,000, 7.8%, 20-year bonds to yield 8% on January 1, 2012. Interest is
paid on June 30 and December 31. The proceeds from the bonds are P9,802,072. Using effective-
interest amortization, how much interest expense will be recognized in 2012?

39. A company issues P10,000,000, 7.8%, 20-year bonds to yield 8% on January 1, 2012. Interest is
paid on June 30 and December 31. The proceeds from the bonds are P9,802,072. Using effective-
interest amortization, what will the carrying value of the bonds be on the December 31, 2012
balance sheet?
40. A company issues P10,000,000, 7.8%, 20-year bonds to yield 8% on January 1, 2011. Interest is
paid on June 30 and December 31. The proceeds from the bonds are P9,802,072. Using straight-
line amortization, what is the carrying value of the bonds on December 31, 2013?
 41. A company issues P10,000,000, 7.8%, 20-year bonds to yield 8% on January 1, 2012. Interest is
paid on June 30 and December 31. The proceeds from the bonds are P9,802,072. What is interest
expense for 2013, using straight-line amortization?

42. On January 1, 2012, Huber Co. sold 12% bonds with a face value of P800,000. The bonds mature
in five years, and interest is paid semiannually on June 30 and December 31. The bonds were sold
for P861,600 to yield 10%. Using the effective-interest method of amortization, interest expense
for 2012 is

43. On January 2, 2012, a calendar-year corporation sold 8% bonds with a face value of P900,000.
These bonds mature in five years, and interest is paid semiannually on June 30 and December 31.
The bonds were sold for P830,400 to yield 10%. Using the effective-interest method of
computing interest, how much should be charged to interest expense in 2012?\

The following information applies to both questions 44 and 45.

On October 1, 2012 Bartley Corporation issued 5%, 10-year bonds with a face value of P3,000,000 at
104. Interest is paid on October 1 and April 1, with any premiums or discounts amortized on a straight-
line basis.

44. The entry to record the issuance of the bonds would include a
a. credit of P75,000 to Interest Payable.
b. credit of P120,000 to Premium on Bonds Payable.
c. credit of P2,880,000 to Bonds Payable.
d. debit of P120,000 to Discount on Bonds Payable.

45. Bond interest expense reported on the December 31, 2012 income statement of Bartley
Corporation would be

46. At the beginning of 2012, Wallace Corporation issued 10% bonds with a face value of
P1,500,000. These bonds mature in the five years, and interest is paid semiannually on June 30
and December 31. The bonds were sold for P1,389,600 to yield 12%. Wallace uses a calendar-
year reporting period. Using the effective-interest method of amortization, what amount of
interest expense should be reported for 2012? (Round your answer to the nearest peso.)

47. On January 1, Patterson Inc. issued P3,000,000, 9% bonds for P2,817,000. The market rate of
interest for these bonds is 10%. Interest is payable annually on December 31. Patterson uses the
effective-interest method of amortizing bond discount. At the end of the first year, Patterson
should report unamortized bond discount of

48. On January 1, Martinez Inc. issued P4,000,000, 11% bonds for P4,260,000. The market rate of
interest for these bonds is 10%. Interest is payable annually on December 31. Martinez uses the
effective-interest method of amortizing bond premium. At the end of the first year, Martinez
should report unamortized bond premium of:

49. At the beginning of 2012, Winston Corporation issued 10% bonds with a face value of
P1,200,000. These bonds mature in five years, and interest is paid semiannually on June 30 and
December 31. The bonds were sold for P1,111,680 to yield 12%. Winston uses a calendar-year
reporting period. Using the effective-interest method of amortization, what amount of interest
expense should be reported for 2012? (Round your answer to the nearest peso.)

50. Kant Corporation retires its P500,000 face value bonds at 102 on January 1, following the
payment of interest. The carrying value of the bonds at the redemption date is P481,250. The
entry to record the redemption will include a
a. credit of P18,750 to Loss on Bond Redemption.
b. credit of P18,750 to Discount on Bonds Payable.
c. debit of P28,750 to Gain on Bond Redemption.
d. debit of P10,000 to Premium on Bonds Payable.
51. Carr Corporation retires its P500,000 face value bonds at 105 on January 1, following the
payment of interest. The carrying value of the bonds at the redemption date is P518,725. The
entry to record the redemption will include a
a. credit of P18,725 to Loss on Bond Redemption.
b. debit of P18,725 to Premium on Bonds Payable.
c. credit of P6,275 to Gain on Bond Redemption.
d. debit of P25,000 to Premium on Bonds Payable.

52. At December 31, 2012 the following balances existed on the books of Foxworth Corporation:
Bonds Payable P3,000,000
Discount on Bonds Payable 240,000
Interest Payable 75,000
Unamortized Bond Issue Costs 180,000

If the bonds are retired on January 1, 2013, at 102, what will Foxworth report as a loss on
redemption?

53. At December 31, 2012 the following balances existed on the books of Rentro Corporation:
Bonds Payable P2,500,000
Discount on Bonds Payable 200,000
Interest Payable 60,000
Unamortized Bond Issue Costs 150,000

If the bonds are retired on January 1, 2013, at 102, what will Rentro report as a loss on
redemption?

54. The December 31, 2012, balance sheet of Hess Corporation includes the following items:
9% bonds payable due December 31, 2021 P2,000,000
Unamortized premium on bonds payable 54,000

The bonds were issued on December 31, 2011, at 103, with interest payable on July 1 and
December 31 of each year. Hess uses straight-line amortization. On March 1, 2013, Hess retired
P800,000 of these bonds at 98 plus accrued interest. What should Hess record as a gain on
retirement of these bonds? Ignore taxes.

55. On January 1, 2006, Hernandez Corporation issued P3,600,000 of 10% ten-year bonds at 103.
The bonds are callable at the option of Hernandez at 105. Hernandez has recorded amortization of
the bond premium on the straight-line method (which was not materially different from the
effective-interest method).

On December 31, 2012, when the fair value of the bonds was 96, Hernandez repurchased
P800,000 of the bonds in the open market at 96. Hernandez has recorded interest and
amortization for 2012. Ignoring income taxes and assuming that the gain is material, Hernandez
should report this reacquisition as

56. The 10% bonds payable of Nixon Company had a net carrying amount of P760,000 on December
31, 2012. The bonds, which had a face value of P800,000, were issued at a discount to yield 12%.
The amortization of the bond discount was recorded under the effective-interest method. Interest
was paid on January 1 and July 1 of each year. On July 2, 2013, several years before their
maturity, Nixon retired the bonds at 102. The interest payment on July 1, 2013 was made as
scheduled. What is the loss that Nixon should record on the early retirement of the bonds on July
2, 2013? Ignore taxes.

57. A corporation called an outstanding bond obligation four years before maturity. At that time there
was an unamortized discount of P600,000. To extinguish this debt, the company had to pay a call
premium of P200,000. Ignoring income tax considerations, how should these amounts be treated
for accounting purposes?
a. Amortize P800,000 over four years.
 b. Charge P800,000 to a loss in the year of extinguishment.
c. Charge P200,000 to a loss in the year of extinguishment and amortize $600,000 over four
years.
d. Either amortize P800,000 over four years or charge P800,000 to a loss immediately,
whichever management selects.

58. The 12% bonds payable of Nyman Co. had a carrying amount of P2,080,000 on December 31,
2012. The bonds, which had a face value of P2,000,000, were issued at a premium to yield 10%.
Nyman uses the effective-interest method of amortization. Interest is paid on June 30 and
December 31. On June 30, 2013, several years before their maturity, Nyman retired the bonds at
104 plus accrued interest. The loss on retirement, ignoring taxes, is

59. Didde Company issues P15,000,000 face value of bonds at 96 on January 1, 2011. The bonds are
dated January 1, 2011, pay interest semiannually at 8% on June 30 and December 31, and mature
in 10 years. Straight-line amortization is used for discounts and premiums. On September 1,
2014, P9,000,000 of the bonds are called at 102 plus accrued interest. What gain or loss would be
recognized on the called bonds on September 1, 2014?

60. Cortez Company issues P3,000,000 face value of bonds at 96 on January 1, 2011. The bonds are
dated January 1, 2011, pay interest semiannually at 8% on June 30 and December 31, and mature
in 10 years. Straight-line amortization is used for discounts and premiums. On September 1,
2014, P1,800,000 of the bonds are called at 102 plus accrued interest. What gain or loss would be
recognized on the called bonds on September 1, 2014?

61. On January 1, 2012, Ann Price loaned P90,156 to Joe Kiger. A zero-interest-bearing note (face
amount, P120,000) was exchanged solely for cash; no other rights or privileges were exchanged.
The note is to be repaid on December 31, 2014. The prevailing rate of interest for a loan of this
type is 10%. The present value of P120,000 at 10% for three years is P90,156. What amount of
interest income should Ms. Price recognize in 2012?

62. On January 1, 2012, Jacobs Company sold property to Dains Company which originally cost
Jacobs P950,000. There was no established exchange price for this property. Danis gave Jacobs a
P1,500,000 zero-interest-bearing note payable in three equal annual installments of P500,000
with the first payment due December 31, 2012. The note has no ready market. The prevailing rate
of interest for a note of this type is 10%. The present value of a P1,500,000 note payable in three
equal annual installments of P500,000 at a 10% rate of interest is P1,243,500. What is the amount
of interest income that should be recognized by Jacobs in 2012, using the effective-interest
method?

63. On January 1, 2012, Crown Company sold property to Leary Company. There was no established
exchange price for the property, and Leary gave Crown a P3,000,000 zero-interest-bearing note
payable in 5 equal annual installments of P600,000, with the first payment due December 31,
2012. The prevailing rate of interest for a note of this type is 9%. The present value of the note at
9% was P2,163,000 at January 1, 2012. What should be the balance of the Discount on Notes
Payable account on the books of Leary at December 31, 2012 after adjusting entries are made,
assuming that the effective-interest method is used?

Use the following information for questions 64 and 65.

Common Stock, P1 par P4,800,000

Paid-in Capital in Excess of Par—Common Stock 550,000
Preferred 8 1/2% Stock, P50 par 2,000,000
Paid-in Capital in Excess of Par—Preferred Stock 400,000
Retained Earnings 1,500,000
Treasury Common Stock (at cost) 150,000

64. The total stockholders' equity of Hale Corporation is

65. The total paid-in capital (cash collected) related to the common stock is
66. Manning Company issued 10,000 shares of its P5 par value common stock having a fair value of
P25 per share and 15,000 shares of its P15 par value preferred stock having a fair value of P20
per share for a lump sum of P520,000. How much of the proceeds would be allocated to the
common stock?

67. Norton Company issues 4,000 shares of its P5 par value common stock having a fair
value of P25 per share and 6,000 shares of its P15 par value preferred stock having a fair value of
P20 per share for a lump sum of P204,000. What amount of the proceeds should be allocated to
the preferred stock?

68. Berry Corporation has 50,000 shares of P10 par common stock authorized. The following
transactions took place during 2012, the first year of the corporation’s existence:
Sold 10,000 shares of common stock for P18 per share.
Issued 10,000 shares of common stock in exchange for a patent valued at P200,000.

At the end of the Berry’s first year, total paid-in capital amounted to

69. Glavine Company issues 6,000 shares of its P5 par value common stock having a fair
value of P25 per share and 9,000 shares of its P15 par value preferred stock having a fair value of
P20 per share for a lump sum of P312,000. The proceeds allocated to the common stock
is

70. Wheeler Company issued 5,000 shares of its P5 par value common stock having a fair value of
P25 per share and 7,500 shares of itsP15 par value preferred stock having a fair value of P20
per share for a lump sum of P260,000. The proceeds allocated to the preferred stock is

71. Pember Corporation started business in 2007 by issuing 200,000 shares of P20 par
common stock for P36 each. In 2012, 30,000 of these shares were purchased for P52 per share by
Pember Corporation and held as treasury stock. On June 15, 2013, these 30,000 shares were
exchanged for a piece of property that had an assessed value of P810,000. Perber’s stock is
actively traded and had a market price of P60 on June 15, 2013. The cost method is used to
account for treasury stock. The amount of paid-in capital from treasury stock transactions
resulting from the above events would be

72. On September 1, 2012, Valdez Company reacquired 16,000 shares of its P10 par value common
stock for P15 per share. Valdez uses the cost method to account for treasury stock. The
journal entry to record the reacquisition of the stock should debit
a. Treasury Stock for P160,000.
b. Common Stock for P160,000.
c. Common Stock for P160,000 and Paid-in Capital in Excess of Par for P60,000.
d. Treasury Stock for P240,000.

73. Gannon Company acquired 8,000 shares of its own common stock at P20 per share on February
5, 2012, and sold 4,000 of these shares at P27 per share on August 9, 2013. The fair value of
Gannon's common stock was P24 per share at December 31, 2012, and P25 per share at
December 31, 2013. The cost method is used to record treasury stock transactions. What
account(s) should Gannon credit in 2013 to record the sale of 4,000 shares?
a. Treasury Stock for P108,000.
b. Treasury Stock for P80,000 and Paid-in Capital from Treasury Stock for P28,000.
c. Treasury Stock for P80,000 and Retained Earnings for P28,000.
d. Treasury Stock for P96,000 and Retained Earnings for P12,000.

74. Long Co. issued 100,000 shares of P10 par common stock for P1,200,000. Long acquired 10,000
shares of its own common stock at P15 per share. Three months later Long sold 5,000 of these
shares at P19 per share. If the cost method is used to record treasury stock transactions, to record
the sale of the 5,000 treasury shares, Long should credit
a. Treasury Stock for P95,000.
 b. Treasury Stock for P50,000 and Paid-in Capital from Treasury Stock for P45,000.
c. Treasury Stock for P75,000 and Paid-in Capital from Treasury Stock for P20,000.
d. Treasury Stock for P75,000 and Paid-in Capital in Excess of Par for P20,000.

75. An analysis of stockholders' equity of Hahn Corporation as of January 1, 2012, is as

follows:

Common stock, par value P20; authorized 100,000 shares;

issued and outstanding 90,000 shares P1,800,000
Paid-in capital in excess of par 700,000
Retained earnings 760,000
Total P3,260,000

Hahn uses the cost method of accounting for treasury stock and during 2012 entered into the
following transactions:
Acquired 2,500 shares of its stock for P75,000.
Sold 2,000 treasury shares at P35 per share.
Sold the remaining treasury shares at P20 per share.

Assuming no other equity transactions occurred during 2012, what should Hahn report at
December 31, 2012, as total additional paid-in capital?

76. Percy Corporation was organized on January 1, 2012, with an authorization of 1,200,000 shares
of common stock with a par value of P6 per share. During 2012, the corporation had the
following capital transactions:

January 5 issued 900,000 shares @ P10 per share

July 28 purchased 120,000 shares @ P11 per share
December 31 sold the 120,000 shares held in treasury @ P18 per share

Percy used the cost method to record the purchase and reissuance of the treasury shares.
What is the total amount of additional paid-in capital as of December 31, 2012?

77. Sosa Co.'s stockholders' equity at January 1, 2012 is as follows:

Common stock, P10 par value; authorized 300,000 shares;

Outstanding 225,000 shares P2,250,000
Paid-in capital in excess of par 700,000
Retained earnings 2,190,000
Total P5,140,000

During 2012, Sosa had the following stock transactions:

Acquired 6,000 shares of its stock for P270,000.
Sold 3,600 treasury shares at P50 a share.
Sold the remaining treasury shares at P41 per share.

No other stock transactions occurred during 2012. Assuming Sosa uses the cost method to record
treasury stock transactions, the total amount of all additional paid-in capital accounts at
December 31, 2012 is

78. Presented below is the stockholders' equity section of Oaks Corporation at December 31, 2012:

Common stock, par value P20; authorized 75,000 shares;

issued and outstanding 45,000 shares P 900,000
Paid-in capital in excess of par value 250,000
Retained earnings 300,000
Total P1,450,000
 During 2013, the following transactions occurred relating to stockholders' equity:
3,000 shares were reacquired at P28 per share.
3,000 shares were reacquired at P35 per share.
1,800 shares of treasury stock were sold at P30 per share.
For the year ended December 31, 2013, Oaks reported net income of P450,000. Assuming
Oaks accounts for treasury stock under the cost method, what should it report as total
stockholders' equity on its December 31, 2013, balance sheet?

79. On December 1, 2012, Abel Corporation exchanged 30,000 shares of its P10 par value common
stock held in treasury for a used machine. The treasury shares were acquired by Abel at a cost of
P40 per share, and are accounted for under the cost method. On the date of the exchange, the
common stock had a fair value of P55 per share (the shares were originally issued at P30 per
share). As a result of this exchange, Abel's total stockholders' equity will increase by

80. Luther Inc., has 3,000 shares of 6%, P50 par value, cumulative preferred stock and
100,000 shares of P1 par value common stock outstanding at December 31, 2013, and December
31, 2012. The board of directors declared and paid a P7,500 dividend in 2012. In 2013, P36,000
of dividends are declared and paid. What are the dividends received by the preferred stockholders
in 2013?

81. Anders, Inc., has 10,000 shares of 5%, P100 par value, cumulative preferred stock and 40,000
shares of P1 par value common stock outstanding at December 31, 2013. There were no
dividends declared in 2011. The board of directors declares and pays a P90,000 dividend in 2012
and in 2013. What is the amount of dividends received by the common stockholders in 2013?

82. Colson Inc. declared a P240,000 cash dividend. It currently has 9,000 shares of 7%, P100 par
value cumulative preferred stock outstanding. It is one year in arrears on its preferred stock. How
much cash will Colson distribute to the common stockholders?

83. Pierson Corporation owned 10,000 shares of Hunter Corporation. These shares were purchased in
2009 for P90,000. On November 15, 2013, Pierson declared a property dividend of one share of
Hunter for every ten shares of Pierson held by a stockholder. On that date, when the market price
of Hunter was P21 per share, there were 90,000 shares of Pierson outstanding. What unrealized
gain and net reduction in retained earnings would result from this property dividend?

84. Stinson Corporation owned 30,000 shares of Matile Corporation. These shares were purchased in
2009 for P270,000. On November 15, 2013, Stinson declared a property dividend of one share of
Matile for every ten shares of Stinson held by a stockholder. On that date, when the market price
of Matile was P21 per share, there were 270,000 shares of Stinson outstanding. What unrealized
gain and net reduction in retained earnings would result from this property dividend?

85. Winger Corporation owned 300,000 shares of Fegan Corporation stock. On December 31, 2012,
when Winger's account "Equity Investment (Fegan Corporation") had a carrying value of P5
per share, Winger distributed these shares to its stockholders as a dividend. Winger originally
paid P8 for each share. Fegan has 1,000,000 shares issued and outstanding, which are
traded on a national stock exchange. The quoted market price for a Fegan share was P7 on the
declaration date and P9 on the distribution date.

What would be the reduction in Winger's stockholders' equity as a result of the above
transactions?

86. Gibbs Corporation owned 20,000 shares of Oliver Corporation’s P5 par value common
stock. These shares were purchased in 2009 for P240,000. On September 15, 2013, Gibbs
declared a property dividend of one share of Oliver for every ten shares of Gibbs held by a
stockholder. On that date, when the market price of Oliver was P21 per share, there were
180,000 shares of Gibbs outstanding. What NET reduction in retained earnings would result
from this property dividend?
87. Melvern’s Corporation has an investment in 10,000 shares of Wallace Company common stock
with a cost of P436,000. These shares are used in a property dividend to stockholders of
Melvern’s. The property dividend is declared on May 25 and scheduled to be distributed on July
31 to stockholders of record on June 15. The fair value per share of Wallace stock is P63 on May
25, P66 on June 15, and P68 on July 31. The net effect of this property dividend on retained
earnings is a reduction of

88. Hernandez Company has 490,000 shares of P10 par value common stock outstanding.
During the year, Hernandez declared a 10% stock dividend when the market price of the stock
was P30 per share. Four months later Hernandez declared a P.50 per share cash dividend. As a
result of the dividends declared during the year, retained earnings decreased by

89. On June 30, 2012, when Ermler Co.'s stock was selling at P65 per share, its equity
accounts were as follows:

Common stock (par value P50; 80,000 shares issued) P4,000,000

Paid-in capital in excess of par 600,000
Retained earnings 4,200,000
If a 100% stock dividend were declared and distributed, common stock would be

90. The stockholders' equity section of Gunkel Corporation as of December 31, 2012, was as follows:

Common stock, par value P2; authorized 20,000 shares;

issued and outstanding 10,000 shares P 20,000
Paid-in capital in excess of par 30,000
Retained earnings 95,000
P145,000
On March 1, 2013, the board of directors declared a 15% stock dividend, and accordingly 1,500
additional shares were issued. On March 1, 2011, the fair value of the stock was P6 per share. For
the two months ended February 28, 2013, Gunkel sustained a net loss of P10,000.

What amount should Gunkel report as retained earnings as of March 1, 2013?

91. The stockholders' equity of Howell Company at July 31, 2012 is presented below:
Common stock, par value P20, authorized 400,000 shares;
issued and outstanding 160,000 shares P3,200,000
Paid-in capital in excess of par 160,000 Retained
earnings 650,000
P4,010,000
On August 1, 2012, the board of directors of Howell declared a 10% stock dividend on
common stock, to be distributed on September 15th. The market price of Howell's
common stock was P35 on August 1, 2012, and P38 on September 15, 2012. What is the amount
of the debit to retained earnings as a result of the declaration and distribution of this stock
dividend?

92. On January 1, 2012, Dodd, Inc., declared a 15% stock dividend on its common stock
when the fair value of the common stock was P20 per share. Stockholders' equity before the stock
dividend was declared consisted of:

Common stock, P10 par value, authorized 200,000 shares;

issued and outstanding 120,000 shares P1,200,000 Additional
paid-in capital on common stock 150,000 Retained
earnings 700,000
Total stockholders' equity P2,050,000

What was the effect on Dodd’s retained earnings as a result of the above transaction?
93. On January 1, 2012, Culver Corporation had 110,000 shares of its P5 par value common stock
outstanding. On June 1, the corporation acquired 10,000 shares of stock to be held in the
treasury. On December 1, when the market price of the stock was P8, the corporation
declared a 15% stock dividend to be issued to stockholders of record on December 16,
2012. What was the impact of the 15% stock dividend on the balance of the retained earnings
account?

94. At the beginning of 2013, Flaherty Company had retained earnings of P250,000. During the year
Flaherty reported net income of P100,000, sold treasury stock at a “gain” of P36,000, declared a
cash dividend of P60,000, and declared and issued a small stock dividend of 3,000 shares (P10
par value) when the fair value of the stock was P20 per share. The amount of retained earnings
available for dividends at the end of 2013 was

95. Masterson Company has 420,000 shares of P10 par value common stock outstanding. During the
year Masterson declared a 10% stock dividend when the market price of the stock was P36 per
share. Three months later Masterson declared a P.60 per share cash dividend. As a result of the
dividends declared during the year, retained earnings decreased by

96. At December 31, 2012 and 2013, Plank Corp. had outstanding 3,000 shares of P100 par value 8%
cumulative preferred stock and 15,000 shares of P10 par value common stock. At December 31,
2012, dividends in arrears on the preferred stock were P12,000. Cash dividends declared in 2013
totaled P45,000. What amounts were payable on each class of stock?

97. How would the declaration and subsequent issuance of a 10% stock dividend by the
issuer affect each of the following when the fair value of the shares exceeds the par value of the
stock?

98. On May 1, 2012, Ziek Corp. declared and issued a 10% common stock dividend. Prior to this
dividend, Ziek had 100,000 shares of P1 par value common stock issued and outstanding.
The fair value of Ziek 's common stock was $20 per share on May 1, 2012. As a result of this
stock dividend, Ziek's total stockholders' equity

99. A corporation declared a dividend, a portion of which was liquidating. How would this
distribution affect each of the following?

100. Farmer Corp. owned 20,000 shares of Eaton Corp. purchased in 2009 for P300,000. On
December 15, 2012, Farmer declared a property dividend of all of its Eaton Corp. shares on the
basis of one share of Eaton for every 10 shares of Farmer common stock held by its stockholders.
The property dividend was distributed on January 15, 2013. On the declaration date, the
aggregate market price of the Eaton shares held by Farmer was P500,000. The entry to
record the declaration of the dividend would include a debit to Retained Earnings of