44.

A firm has the balance sheet accounts, common stock, and paid-in capital in excess of par,
BASIC with values of $40,000 and $500,000, respectively. The firm has 40,000 common shares
outstanding. If the firm had a par value of $1, the stock originally sold for (E)
A. $11.50/share. C. $13.50/share.
CAPITAL TRANSACTIONS
B. $12.50/share. D. $15.50/share. Gitman
LUMPSUM ISSUANCE
Bonds & Stocks
PREFERRED STOCK Share premium
Shares Issued & Price Fair value of stocks not known
23. The stockholders’ equity of SWEET TOOTH at the end of 1993 and 1992 are as follows: 1. On July 1 of the current year, Boston Corp., a closely held corporation, issued 6% bonds with
1993 1992 a maturity value of $60,000, together with 1,000 shares of its $5 par value common stock, for a
Preferred stock, P100 par, 12% P1,000,000 P 600,000 combined cash amount of $110,000. The market value of Boston's stock cannot be
Common stock, P20 par 2,000,000 1,800,000 ascertained. If the bonds had been issued separately, they would have sold at a discount for
Paid in capital in excess of par $40,000 on an 8% yield-to-maturity basis. What amount should Boston record for share
Preferred 16,000 - premium on the issuance of the stock? (E)
Common 4,350,000 3,750,000 A. $45,000 C. $65,000
Retained earnings 80,000 180,000 B. $55,000 D. $75,000 AICPA 1192
How many shares of preferred stock were issued in 1993 and at what price? (E)
RPCPA 1093 A. B. C. D. 2. On July 1, 2012, Abysmal Company issued 6% bonds with a maturity value of P,0600,000,
No. of preferred shares P4,000 4,000 10,000 10,000 together with 10,000 ordinary shares with P50 par value for a combined cash amount of
Price P100 P104 P100 P104 P11,100,000. The market value of the ordinary share cannot be determined. If the bonds were
issued separately, the bonds would have sold for P4,000,000 on an 8% yield to maturity basis.
COMMON STOCK What amount should be reported for share premium on the issuance of the ordinary shares?
Proceeds from Sale of Common Stock (E)
18. Data from the balance sheet of Alpha Builders Corp. show Unissued Stock of P40,000; Capital A. 4,500,000 C. 6,500,000
Stock Authorized P100,000; Premium on Stock, P4,000; Subscriptions Receivable P16,000; B. 5,500,000 D. 7,500,000 CPAR 1012
and Capital Stock Subscribed P30,000. How much cash was collected from the sale of stock?
(M) 2. On July 1, 2009, Georgia Company issued 10% bonds with a maturity value of P5,000,000
A. P78,000 C. P104,000 together with 50,000 shares with P50 par value ordinary shares for a combined cash amount
B. P88,000 D. Some other answer. RPCPA 0579 of P12,000,000. The market value of Georgia’s ordinary shares cannot be ascertained. If the
bonds were issued separately, they would have sold for P5,500,000. What amount should
Issue Price Georgia report for share premium on the issuance of the share premium?
43. A firm has the balance sheet accounts, common stock, and paid-in capital in excess of par, A. 1,500,000 C. 6,500,000
with values of $10,000 and $250,000, respectively. The firm has 10,000 common shares B. 4,000,000 D. 9,500,000 Siy
outstanding. If the firm had a par value of $1, the stock originally sold for (E)
A. $24/share. C. $26/share. 2. On September 1, 2001, Jordan Corp., a closely held corporation, issued 6% bonds with a
B. $25/share. D. $30/share. Gitman maturity value of $120,000, together with 2,000 shares of its $5 par value common stock, for a
combined cash amount of $220,000. The market value of Jordan’s stock cannot be
 ascertained. If the bonds were issued separately, they would have sold for $80,000 on an 8% date, Rya’s common stock was selling for $36 per share, and the convertible preferred stock
yield-to-maturity basis. What amount should Jordan record for share premium on the issuance was selling for $27 per share. What amount of the proceeds should be allocated to Rya’s
of the stock? (E) convertible preferred stock? (E)
A. $90,000 C. $130,000 A. $44,000 C. $54,000
B. $110,000 D. $150,000 AICPA 1192 B. $48,000 D. $60,000 AICPA 0592
Preferred & Common Stocks 1. On March 1, 2012, Abeyance Company issued 10,000 ordinary shares with P200 par value
Total Value of Preferred Stock and 20,000 convertible preference shares with P200 par value for a total of P8,000,000. On
Relative sales value method this date, the ordinary share is selling at P360 and the preference share is selling at P270.
3. Hiro Corp. issues 1,000 €5 par value ordinary shares and 1,000 €20 par value preference What amount of the proceeds should be allocated to the convertible preference shares? (E)
shares for a lump sum of €60,000. At the issue date, the ordinary shares were selling for €36 A. 4,400,000 C. 5,400,000
and the preference shares were selling for €28. How much is recorded in Hiro’s statement of B. 4,800,000 D. 6,000,000 CPAR 1012
financial position for the preference shares? (E)
A. €26,250 C. €31,000 1. On May 1, 2009, Serbia Company issued 60,000 shares of its P50 par value ordinary shares
B. €28,750 D. €36,000 KW&W 1e and 20,000 shares of its P100 par value preference shares for a total consideration of
P7,500,000. At this date, the ordinary shares were selling for P100 per share and the
4. Norton Company issues 4,000 shares of its $5 par value ordinary shares having a fair value of preference shares was selling for P150 per share. What amount of the proceeds should be
$25 per share and 6,000 shares of its $15 par value preference shares having a fair value of allocated to the preference shares?
$20 per share for a lump sum of $192,000. What amount of the proceeds should be allocated A. 2,000,000 C. 3,000,000
to the preference shares? (E) B. 2,500,000 D. 4,000,000 Siy
A. $90,000 C. $120,000
B. $104,727 D. $172,000 KW&W 1e 55. On July 1, 2001, Alou Co. issued 1,000 shares of its $10 par common stock and 2,000 shares
of its $10 par convertible preferred stock for a lump sum of $50,000. At this date Alou's
5. Wheeler Company issued 5,000 shares of its $5 par value ordinary shares having a market common stock was selling for $24 per share and the convertible preferred stock for $18 per
value of $25 per share and 7,500 shares of its $15 par value preference shares having a share. The amount of the proceeds allocated to Alou's preferred stock should be (E)
market value of $20 per share for a lump sum of $240,000. The proceeds allocated to the A. $25,000. C. $30,000.
preference shares is (E) B. $27,500. D. $36,000. K, W & W
A. $109,091 C. $150,000
B. $130,909 D. $215,000 KW&W 1e 59. On July 1, Rainbow Corporation issued 2,000 shares of its $10 par common and 4,000 shares
of its $10 par preferred stock for a lump sum of $80,000. At this date, Rainbow's common
6. On February 1, Lopez Corp. issued 1,000 shares of its $10 par common and 2,000 shares of stock was selling for $18 per share and the preferred stock for $13.50 per share. The amount
its $10 par convertible preferred stock for a lump sum of $40,000. At this date, Lopez’s of proceeds allocated to Rainbow's preferred stock should be (E)
common stock was selling for $18 per share and the convertible preferred stock for $13.50 per A. $40,000. C. $54,000.
share. The amount of proceeds allocated to Lopez’s preferred stock should be (E) B. $48,000. D. $60,000. S, S & S
A. $22,000 C. $27,000
B. $24,000 D. $30,000 AICPA 0592 8. On July 1, 2012, Nall Co. issued 2,500 shares of its $10 par ordinary shares and 5,000 shares
of its $10 par convertible preference shares for a lump sum of $125,000. At this date Nall's
7. On March 1, 1992, Rya Corp. issued 1,000 shares of its $20 par value common stock and ordinary shares were selling for $24 per share and the convertible preference shares for $18
2,000 shares of its $20 par value convertible preferred stock for a total of $80,000. At this per share. The amount of the proceeds allocated to Nall's preference shares should be (E)
 A. $62,500. C. $75,000.
B. $68,750. D. $90,000. AICPA adapted 5. What amount of the proceeds should be allocated to the preference shares? (E)
A. P1,875,000 C. P2,500,000
Total Value of Common Stock B. P2,000,000 D. P3,000,000
9. Glavine Company issues 6,000 shares of its $5 par value ordinary shares having a market
value of $25 per share and 9,000 shares of its $15 par value preference shares having a fair 6. What amount of the proceeds should be allocated to the preference shares, if the shares are
value of $20 per share for a lump sum of $288,000. The proceeds allocated to the ordinary redeemable at the option of the holder after 5 years? (E)
shares is (E) A. P1,875,000 C. P2,500,000
A. $30,000 C. $150,000 B. P2,000,000 D. P3,000,000
B. $130,909 D. $157,091 KW&W 1e
DONATED CAPITAL
30. A corporation issues 50 "packages" of securities for $154 per package. Each package consists Common Stocks
of three shares of $5 par common stock and one share of $50 par preferred stock. If the 12. On December 1, 1992, Line Corp. received a donation of 2,000 shares of its $5 par value
market values of $40 per share for the common stock and $100 per share for preferred stock common stock from a stockholder. On that date, the stock's market value was $35 per share.
are known, the journal entry to record the sale would assign a total value to the common stock The stock was originally issued for $25 per share. By what amount would this donation cause
(Common Stock and Share premium on Common Stock) of (E) total stockholders' equity to decrease? (M)
A. $2,200 C. $5,775 A. $0 C. $50,000
B. $4,200 D. $6,000 NB&J 11e B. $20,000 D. $70,000 AICPA 0593
10. Manning Company issued 10,000 shares of its $5 par value ordinary shares having a fair 13. On December 1, 2000, Line Corp. received a donation of 2,000 shares of its $5 par value
value of $25 per share and 15,000 shares of its $15 par value preference shares having a fair common stock from a shareholder. On that date, the stock ‘s fair value was $35 per share.
value of $20 per share for a lump sum of $480,000. How much of the proceeds would be The stock was originally issued for $25 per share. By what amount would this donation cause
allocated to the ordinary shares? (E) total shareholders’ equity to decrease if Line accounts for treasury stock using the cost
A. $50,000 C. $250,000 method? (M)
B. $218,182 D. $255,000 KW&W 1e A. $0 C. $50,000
B. $20,000 D. $70,000 AICPA 0593
Share premium – Ordinary Shares
11. Hiro Corp. issues 1,000 €5 par value ordinary shares and 1,000 €20 par value preference 14. On December 31, 2001, Circle Corp. received a contribution of 4,000 shares of its $10 par
shares for a lump sum of €60,000. At the issue date, the ordinary shares were selling for €36 value common stock from a shareholder. On that date, the stock market’s value was $70 per
and the preference shares were selling for €28. The Share Premium—Ordinary account will be share. The stock was originally issued for $50 per share. By what amount does this
credited for (E) contribution cause total shareholders’ equity to decrease? (M)
A. €26,250 C. €31,000 A. $0 C. $200,000
B. €28,750 D. €36,000 KW&W 1e B. $40,000 D. $280,000 AICPA 0593
Comprehensive SHARE PREMIUM
Use the following information for the next two questions. Cabarles Issuance
On March 1, 2011, Mall Company issued 60,000, P50 par value, ordinary shares and 20,000, P100 42. Martin Corporation was organized on January 3, 2004. Martin was authorized to issue 50,000
par value, preference shares for a total consideration of P7,500,000. At this date, the ordinary shares of common stock with a par value of $10 per share. On January 4, Martin issued
share was selling for P100 per share and the preference share was selling for P150 per share. 30,000 shares of common stock at $25 per share. On July 15, Martin issued an additional
 10,000 shares at $20 per share. Martin reported income of $33,000 during 2004. In addition, Common Stock
Martin declared a dividend of $.50 per share on December 31, 2004. The amount reported on Total Par Value of Common Stock Issued
Martin Corporation's December 31, 2004, balance sheet as share premium was (E) Issuance
A. $400,000. C. $563,000. 15. A company is started in Year One and has 100,000 shares of common stock authorized with a
B. $550,000. D. $950,000. S, S & S par value of $10 per share. The company issues 20,000 shares of this stock for $21 per share
in Year One and another 10,000 shares for $24 per share in Year Two. What is recorded in the
LEGAL CAPITAL company’s Common Stock account at the end of Year Two? (E)
Issue price of no par stock A $240,000 C $660,000
Par or stated value of (1) issued stock, (2) subscribed stock & (3) stock dividends distributable B $300,000 D $1,000,000
26. The stockholders’ equity section of GASPARELLI revealed the following information on
January 1, 1993: Total Contributed Capital
Preferred stock, P100 par value P230,000 Issuance for cash & nonmonetary exchange
Paid-in capital in excess of par value preferred 80,500 16. Berry Corporation has 50,000 shares of $10 par ordinary shares authorized. The following
Common stock, P15 par value 525,000 transactions took place during 2010, the first year of the corporation’s existence:
Paid in capital in excess of par – common 275,000  Sold 5,000 ordinary shares for $18 per share.
Subscribed common stock 5,000  Issued 5,000 ordinary shares in exchange for a patent valued at $100,000.
Retained earnings 190,000 At the end of the Berry’s first year, total contributed capital amounted to
Notes payable 400,000 A. $40,000. C. $100,000.
Subscriptions receivable – common 40,000 B. $90,000. D. $190,000. KW&W 1e
How much is the legal capital of the company? (M)
A. P0.755 million C. P1.115 million Issuance, Issuance
B. P0.76 million D. P1.3055 million RPCPA 1093 17. Poodle Corporation was organized on January 3, 2011. The firm was authorized to issue
100,000 shares of $5 par common stock. During 2011, Poodle had the following transactions
26. The shareholders’ equity section of Glee Company revealed the following information on relating to shareholders' equity:
December 31, 2013.  Issued 30,000 shares of common stock at $7 per share.
Preference share capital, P100 par P2,300,000  Issued 20,000 shares of common stock at $8 per share.
Share premium – preference share 805,000  Reported a net income of $100,000.
Ordinary share capital, P15 par 5,250,000  Paid dividends of $50,000.
Share premium – ordinary share 2,750,000 What is total Paid-in capital at the end of 2011? (E)
Subscribed ordinary share capital 500,000 A. $320,000. C. $420,000.
Retained earnings 1,900,000 B. $370,000. D. $470,000. S&S 6e
Notes payable 4,000,000
Subscriptions receivable – common 400,000 18. Value Corporation was organized on January 3, 2003. The firm was authorized to issue
How much is the legal capital ? (M) 100,000 shares of $5 par common stock. During 2003, Value had the following transactions
A. 7,650,000 C. 9,950,000 relating to shareholders' equity:
B. 8,050,000 D. 11,605,000 Valix 13  Issued 10,000 shares of common stock at $7 per share.
 Issued 20,000 shares of common stock at $8 per share.
 Reported a net income of $100,000.
CONTRIBUTED CAPITAL  Paid dividends of $50,000.
 What is total contributed capital at the end of 2003? (E) Premium on bonds payable 3,000
A. $280,000. C. $330,000. Common stock, $10 par 300,000
B. $230,000. D. $180,000. S, S & T If total contributed capital is $406,000, what is the amount of premium on common stock for
Spring Company?
Issued, subscribed A. $2,500 C. $5,000
19. Presented below is information related to Getty Corporation: B. $3,500 D. $6,000 NB&J 11e
Subscriptions Receivable, Common Stock $ 120,000
Common Stock, $1 par 3,600,000 Common Stock Subscribed
Common Stock Subscribed 240,000 31. Presented below is information related to Getty Corporation:
Paid-in Capital in Excess of Par-Common Stock 210,000 Subscriptions Receivable, Common Stock $ 120,000
Preferred 8 1/2% Stock, $50 par 1,200,000 Common Stock, $1 par 3,600,000
Paid-in Capital in Excess of Par-Preferred Stock 240,000 Common Stock Subscribed 240,000
Retained Earnings 900,000 Paid-in Capital in Excess of Par-Common Stock 210,000
Treasury Common Stock (at cost) 90,000 Preferred 8 1/2% Stock, $50 par 1,200,000
The total paid-in capital (cash collected) related to the common stock is Paid-in Capital in Excess of Par-Preferred Stock 240,000
A. $3,810,000. C. $4,050,000. Retained Earnings 900,000
B. $3,930,000. D. $4,170,000. K, W & W Treasury Common Stock (at cost) 90,000
The total paid-in capital related to the common stock subscribed is
Trial balance A. $120,000.
8. The adjusted trial balance of Makati Company at December 31, 2009 includes the following B. $210,000.
account balances: C. $450,000.
Share capital 5,000,000 D. cannot be determined from the information given. K, W & W
Share premium 500,000
Accumulated profits 2,000,000 Total Paid-in Capital of Common Stock
Revaluation reserve 1,000,000 Composition
Translation reserve – debit 300,000 29. Presented below is information related to Getty Corporation:
Treasury shares, at cost 200,000 Subscriptions Receivable, Common Stock $ 120,000
What amount from the above is Makati’s contributed capital? (E) Common Stock, $1 par 3,600,000
A. 5,000,000 C. 5,500,000 Common Stock Subscribed 240,000
B. 5,300,000 D. 8,000,000 Siy Paid-in Capital in Excess of Par-Common Stock 210,000
Preferred 8 1/2% Stock, $50 par 1,200,000
Common Stock & Preferred Stock Paid-in Capital in Excess of Par-Preferred Stock 240,000
Premium on Common Stock Retained Earnings 900,000
93. The following information is provided for Spring Company: Treasury Common Stock (at cost) 90,000
Retained earnings $ 35,000 The total paid-in capital (cash collected) related to the common stock is
Preferred stock, 5%, $50 par 100,000 A. $3,810,000. C. $4,050,000.
Organization expense 2,500 B. $3,930,000. D. $4,170,000. K, W & W
Premium on common stock ?
Share premium from recall of preferred stock 1,000 Total Contributed Capital
Issuance, subscribed capitalization:
20. Baby Jean Company was incorporated on January 1, 2003, with the following authorized  40,000 shares of common stock, no par value, stated value $40 per share
capitalization:  10,000 shares of 5 percent cumulative preferred stock, par value $10 per share
 200,000 shares of common stock, no par, stated value P100 per share During 2005, Amelia issued 24,000 shares of common stock for a total of $1,200,000 and
 200,000 shares of 10% cumulative preferred stock, par value P50 per share. 6,000 shares of preferred stock at $16 per share. In addition, on December 20, 2005,
During 2003 Baby Jean issued 150,000 shares of common stock for a total of P18,000,000 subscriptions for 2,000 shares of preferred stock were taken at a purchase price of $17. These
and 50,000 shares of preferred stock at P60 per share. In addition, on December 15, 2003, subscribed shares were paid for on January 2, 2006. What should Amelia report as total
subscriptions for 20,000 shares of preferred stock were taken at a purchase price of P100. contributed capital on its December 31, 2005, balance sheet? (M1**)
These subscribed shares were paid for on January 2, 2004. Net income for 2003 was A. $1,040,000 C. $1,296,000
P5,000,000. What should Baby Jean report as total contributed capital on its December 31, B. $1,262,000 D. $1,330,000 S, S & S
2003 balance sheet? (M1**)
A. 21,000,000 C. 26,000,000 7. The Amelia Corporation was incorporated on January 1, 2009, with the following authorized
B. 23,000,000 D. 28,000,000 CPAR capitalization:
• 50,000 ordinary shares, no par value, stated value P20 per share
50. Oldham Corporation was incorporated on January 1, 2001, with the following authorized • 20,000 10 percent cumulative preference shares, par value P100 per share
capitalization: During 2009, Amelia issued 30,000 ordinary shares for a total of P1,350,000 and 6,000
 20,000 shares of common stock no par value, stated value $40 per share. preference shares at P130 per share. In addition, on December 20, 2009, subscriptions for
 6,000 shares of 5% cumulative preferred stock, par value $10 per share. 2,000 shares of preferred stock were taken at a purchase price of P150, half of the price was
During 2001, Oldham issued 10,000 shares of common stock for a total of $600,000 and 5,000 paid for on this date. The balance for the subscribed shares was paid for on March 2, 2010.
shares of preferred stock at $24 per share. In addition, on December 20, 2001, subscriptions What should Amelia report as total contributed capital on its December 31, 2009, balance
for 1,000 shares of preferred stock were taken at a purchase price of $30. These subscribed sheet?
shares were paid for on January 2, 2002. What should Oldham report as total paid-in capital A. 1,400,000 C. 2,280,000
on its December 31, 2001, balance sheet? (M1**) B. 2,130,000 D. 2,430,000 Siy
A. $690,000. C. $720,000.
B. $696,000. D. $750,000. K, W & W 22. The stockholders’ equity section of Norm Company revealed the following information on
December 31, 2005:
21. The Amlin Corporation was incorporated on January 1, 2010, with the following authorized Preferred stock, P100 par 5,000,000
capitalization: Additional paid in capital-preferred 2,000,000
 20,000 shares of common stock, no par value, stated value $40 per share. Common stock, P50 3,200,000
 5,000 shares of 5% cumulative preferred stock, par value $10 per share. Additional paid in capital-common 500,000
During 2010 Amlin issued 12,000 shares of common stock for a total of $600,000 and 3,000 Subscribed common stock 800,000
shares of preferred stock at $16 per share. In addition, on December 20, 2010, subscriptions Retained earnings-appropriated 250,000
for 1,000 shares of preferred stock were taken at a purchase price of $17. These subscribed Unrealized loss on available for sale securities 600,000
shares were paid for on January 2, 2011. What should Amlin report as total contributed capital Subscription receivable-common 400,000
on its December 31, 2010 balance sheet? (M1**) Retained earnings- unappropriated 3,500,000
A: $520,000 C: $665,000 Treasury stock 1,000,000
B: $648,000 D: $850,000 Wiley 11 How much is the contributed capital of Norm Company as of December 31, 2005? (M)
A. P10,100,000 C. P11,100,000
50. The Amelia Corporation was incorporated on January 1, 2005, with the following authorized B. P10,500,000 D. P11,500,000 R. Ocampo
  Preferred stock, $10 par value, 3,000 shares originally issued for $25 per share
23. The following information is provided for Murphy Corporation: King's February 1 statement of shareholders' equity should report
Common stock, $10 par $340,000 AICPA 0593 A. B. C. D.
Bonds payable 28,000 Common Stock $10,000 $10,000 $150,000 $150,000
Share premium from conversion of preferred stock into common 3,000 Preferred Stock $30,000 $75,000 $30,000 $75,000
Retained earnings 100,000 Paid-in Capita $185,000 $140,000 $45,000 $0
Share premium on preferred stock 10,000
Common stock subscribed 30,000 *. On April 1, 1997, Empire Corp., a newly formed company, had the following stock issued and
Unrealized capital 5,600 outstanding:
Premium on bonds payable 2,000  Common stock, no par, P2 stated value, 20,000 shares originally issued for P60 per
Preferred stock, 6%, $100 par 80,000 share.
What is the amount of contributed capital for Murphy Corporation?  Preferred stock, P20 par value, 6,000 shares originally issued for P100 per share.
A. $430,000 C. $463,000 Empire’s April 1, 1997 statement of stockholders’ equity should report common stock,
B. $433,000 D. $468,600 NB&J 11e preferred stock, and additional paid in capital of
RPCPA 0597 A. B. C. D.
Outstanding Balances
Common stock P 40,000 P 40,000 P1,200,000 P1,200,000
24. On September 1, 1992, Hyde Corp., a newly formed company, had the following stock issued
Preferred stock P 120,000 P 600,000 P 120,000 P 600,000
and outstanding:
Share premium P1,640,000 P1,100,000 P 480,000 P 0
 Common stock, no par, $1 stated value, 5,000 shares originally issued for $15 per share.
 Preferred stock, $10 par value, 1,500 shares originally issued for $25 per share.
Hyde’s September 1, 1992, statement of stockholders’ equity should report NONMONETARY EXCHANGE
Incorporation of a Sole Proprietorship
AICPA 1192 A. B. C. D.
Capital Account
Common stock $ 5,000 $ 5,000 $75,000 $75,000 47. On January 2, 1996, Reims purchased the net assets of Alador Laundry, a sole proprietroship,
Preferred stock $15,000 $37,500 $15,000 $37,500 for P3,500,000, and commenced operations of Saint Etienne Laundry, a sole proprietorship.
Share premium $92,500 $70,000 $22,500 $ 0 The assets have a carrying amount of P3,750,000 and a market value of P3,600,000. In Saint
Etienne’s cash basis financial statements for the year ended December 31, 1996, Saint
25. On April 1, 1993, Hyde Corp., a newly formed company, had the following stock issued and Etienne reported revenues in excess of expenses of P600,000. Reim’s drawings during 1996
outstanding: were P200,000.
• Common stock, no par, $1 stated value, 20,000 shares originally issued for $30 per share. In Saint Etienne’s financial statements, what amount should be reported as Capital – Reims?
• Preferred stock, $10 par value, 6,000 shares originally issued for $50 per share. A. P3,900,000 C. P4,100,000
Hyde's April 1, 1993, statement of stockholders' equity should report: B. P4,000,000 D. P4,150,000 RPCPA 1097
AICPA 0593 A. B. C. D.
Common Stock $20,000 $20,000 $600,000 $600,000 Share premium
Preferred Stock $60,000 $300,000 $60,000 $300,000 35. The December 31, 1995 condensed balance sheet of Wurzburg Services, an individual
Share premium $820,000 $580,000 $240,000 $0 proprietorship, follows:
Current assets P280,000
26. On February 1 of the current year, King Corp., a newly formed company, had the following Equipment (net) 260,000
stock issued and outstanding: P540,000
 Common stock, no par, $1 stated value, 10,000 shares originally issued for $15 per share
 Liabilities P140,000 Liabilities 70,000
Tony Wurzburg, Capital 400,000 On January 2, 2001, Rhome Services was incorporated, with 10,000 shares of $5 par value
P540,000 common stock issued. How much should be credited to share premium?
A. $210,000. C. $250,000.
Fair values at December 31, 1995 are as follows: B. $230,000. D. $320,000. K, W & W
Current assets P320,000
Equipment 420,000 8. The December 31, 19_4 condensed balance sheet of Dunn Services, an individual
Liabilities 140,000 proprietorship, follows: (3)
On January 2, 1996, Wurzburg Services was incorporated with 5,000 shares of P20 par value Current assets P140,000
common stock issued. Equipment (net) 130,000
How much should be credited to share premium? P270,000
A. P400,000 C. P500,000
B. P460,000 D. P640,000 RPCPA 1096 Liabilities P 70,000
John, Dunn, Capital 200,000
49. The December 31, 2010, condensed balance sheet of Rhome Services, an individual P270,000
proprietorship, follows:
Current assets P140,000 Fair values at December 31, 19_4 are as follows:
Equipment (net) 130,000 Current assets P160,000
P270,000 Equipment 210,000
Liabilities P 70,000 Liabilities 70,000
Ted Rhome, Capital 200,000 On January 2, 19_5, Dunn Services was incorporated with 5,000 shares of P10 par value
P270,000 common stock issued. How much should be credited to share premium?
Fair values at December 31, 2010, are as follows: A. P200,000. C. P250,000.
Current assets P160,000 B. P230,000. D. P320,000.
Equipment 210,000
Liabilities 70,000 Incorporation of a Partnership
On January 2, 2010, Rhome Services was incorporated, with 10,000 shares of P5 par value No. of Shares Received
common stock issued. How much should be credited to additional paid-in capital? 34. MAC, KUH, and NAT, partners sharing profits and losses equally, decided to form a
A. 210,000. C. 250,000. corporation. They have capital balances, respectively, of P100,000, P100,000 and P200,000,
B. 230,000. D. 320,000. Siy and all of their assets and liabilities will be transferred to the corporation. Their net assets will
be revalued from P400,000 to P550,000, with the substantial revaluation due to land which
54. The December 31, 2001, condensed balance sheet of Rhome Services, an individual was originally contributed by NAT at P100,000. At P10 par value, the partners are to receive
proprietorship, follows: shares of stock as follows:
Current assets $140,000 Liabilities $ 70,000 A. 10,000, 10,000, and 35,000, respectively.
Equipment (net) 130,000 Ted Rhome, Capital 200,000 B. 12,500, 12,500, and 30,000, respectively.
$270,000 $270,000 C. 15,000, 15,000, and 25,000, respectively.
Fair values at December 31, 2001, are as follows: D. 18,333, 18,333, and 18,334, respectively. RPCPA 0595
Current assets $160,000
Equipment 210,000 Questions 1 and 2 are based on the following information. RPCPA 0588
Roy and Gil are partners sharing profits and losses in the ratio of 1:2, respectively. On July 1, Accounts receivable 100,000 Accum. Depreciation 8,000
19x7, they decided to form the R&G Corp. by transferring the assets and liabilities from the Merchandise Inventory 140,000 Rob, capital 140,000
partnership to the Corporation in exchange of its stocks. The following is the post-closing trial Equipment 80,000 Roy, capital 120,000
balance of the partnership to the Corporation in exchange of its stocks. The following is the post- Total P440,000 Total P440,000
closing trial balance of the partnership: They agreed to incorporate their partnership, with the new corporation absorbing the net
Debit Credit assets after the following adjustments: provision of allowance for bad debts of P10,000;
Cash P 45,000 statement of the inventory at its current fair value of P160,000; and recognition of further
Accounts Receivable (net) 60,000 depreciation on the equipment of P3,000. The corporation’s capital stock is to have a par
Inventory 90,000 value of P100, and the partners are to be issued corresponding total shares equivalent to their
Fixed Assets (net) 174,000 adjusted capital balances.
Liabilities P 60,000 The total par value of the shares of capital stock that were issued to partners ROB and ROY
Roy, Capital 94,800 was
Gil, Capital 214,200 A. P260,000 C. P273,000
P369,000 P369,000 B. P267,000 D. P280,000 RPCPA 1094
It was agreed that adjustments be made to the following assets to be transferred to the corporation:
Accounts Receivable P 40,000 Share premium
Inventory 68,000 27. The December 31, 2000 condensed balance sheet of Moore and Daughter, a partnership,
Fixed Assets 180,600 follows:
The R&G Corporation was authorized to issue P100 par preferred stock and P10 par common Current assets $280,000 Liabilities $140,000
stock. Roy and Gil agreed to receive for their equity in the partnership 720 shares of the common Equipment (net) 260,000 Moore & Daughter, capital 400,000
stock each, plus even multiples of 10 shares of preferred stock for their remaining interest. $540,000 $540,000
1. The total number of shares of preferred and common stock issued by the Corporation in Fair values at December 31, 2000 are as follows:
exchange of the assets and liabilities of the partnership are Current assets $320,000
A. B. C. D. Equipment 420,000
Preferred stock 2,540 shares 2,592 shares 2,642 shares 2,642 shares Liabilities 140,000
Common stock 1,500 shares 1,440 shares 1,440 shares 1,550 shares On January 2, 2001, Moore and Daughter was incorporated, with 10,000 shares of $10 par
value common stock issued. How much should be credited to additional contributed capital?
2. The distribution of stock to Roy and Gil are: A. $400,000 C. $600,000
Roy Gil B. $500,000 D. $640,000 AICPA 0593
Preferred Common Preferred Common
A. 738 shares 720 shares 1,758 shares 720 shares 22. The condensed balance sheet of the partnership of Ken Sy and Ben Ty as of December 31,
B. 758 shares 720 shares 1,834 shares 720 shares 19x4 showed the following:
C. 773 shares 750 shares 1,843 shares 750 shares Total assets P200,000
D. 785 shares 720 shares 1,384 shares 720 shares Total liabilities 40,000
Ken Sy, capital 80,000
Total Par Value of Shares Issued Ben Ty, capital 80,000
12. Partners ROB and ROY, who share equally in profits and losses, have the following balance On this date, the partnership was dissolved and its net assets were transferred to a newly-
sheet as of December 31, 19x9: formed corporation. The fair value of the assets was P24,000 more than the carrying value on
Cash P120,000 Accounts payable P172,000 the firm’s books. Each of the partners was issued 10,000 shares of the corporation’s P1 par
 common stock. Immediately after effecting the transfer of the net assets, and the issuance of
stock, the corporation’s share premium account would be credited for 31. East Co. issued 2,000 shares of its $5 par common stock to Krannik as compensation for
A. P136,000 C. P154,000 1,000 hours of legal services performed. Krannik usually bills $200 per hour for legal services.
B. P140,000 D. P164,000 RPCPA 0594 On the date of issuance, the stock was trading on a pubic exchange at $160 per share. By
what amount should the share premium account increase? (E)
Issuance of Stock as Compensation for Services Performed A. $190,000 C. $310,000
Amount Recorded for Services Performed B. $200,000 D. $320,000 AICPA 1194
28. This information represents an independent transaction involving the issuance of 10,000
shares of common stock by Hessler Corporation during the year. In this situation, 10,000 32. Mouse Co. issued 1,000 shares of its $5 par common stock to Howe as compensation for
shares of common stock represents the entire amount Hessler gave up in the transaction. 1,000 hours of legal services performed. Jason usually bills $160 per hour for legal services.
Hessler's common stock has $5 per share par value. Hessler received services from August 1 On the date of issuance, the stock was trading on a public exchange at $140 per share. By
through September 11 in exchange for the 10,000 shares of common stock. The exchange of what amount should the share premium account increase as a result of this transaction? (E)
stock took place on September 11. The market value of Hessler's common stock was $18 per A. $135,000 C. $155,000
share on August 1 and $20 per share on September 11. The amount recorded for the services B. $140,000 D. $160,000 AICPA 1194 F-28
would have been
A. $50,000. C. $190,000. 2. Tacurong Company issued 5,000 shares of its P100 par common stock to a legal counsel as
B. $180,000. D. $200,000. CMA 0686 compensation for 500 hours of legal services performed. The legal counsel usually bills
P1,800 per hour for legal services. On the date issuance, the stock was trading at a public
Share premium exchange at P150 per share. By what amount should the additional paid in capital account
29. Ashe Corp. was organized on January 1, 2010, with authorized capital of 100,000 shares of increase as a result of this transaction? (E)
$20 par value common stock. During 2010 Ashe had the following transactions affecting A. 250,000 C. 750,000
stockholders’ equity: B. 400,000 D. 900,000 CPAR 4149
January 10 -- Issued 25,000 shares at $22 a share.
March 25 -- Issued 1,000 shares for legal services when the fair value was $24 a 33. Earl was engaged by Farm Corp. to perform consulting services. Earl’s compensation for
share. these services consisted of 1,000 shares of Farm’s $10 par value common stock, to be issued
September 30 -- Issued 5,000 shares for a tract of land when the fair value was $26 a to Earl on completion of Earl’s services. On the execution date of Earl’s employment contract,
share. Farm’s stock had a market value of $40 per share. Six months later, when Earl’s services
What amount should Ashe report for share premium at December 31, 2010? were completed and the stock issued, the stock’s market value was $50 per share. Farm’s
A: $50,000 C: $80,000 management estimated that Earl’s services were worth $100,000 in cost savings to the
B: $54,000 D: $84,000 Wiley 11 company. As a result of this transaction, share premium should increase by (M)
A. $ 30,000 C. $ 90,000
Effect on Share premium B. $ 40,000 D. $100,000 Wiley 11
Fair value of the stock
30. East Co. issued 1,000 shares of its $5 par common stock to Howe as compensation for 1,000
hours of legal services performed. Howe usually bills $160 per hour for legal services. On the
date of issuance, the stock was trading on a public exchange at $140 per share. By what
amount should the share premium account increase as a result of this transaction? (E)
A. $135,000 C. $155,000
B. $140,000 D. $160,000 AICPA 1194