Chapter 9 Shareholders Equity

Preference Share Ordinary Share Retained Treasury Shares

Date Shares Amount Shares Amount APIC Earnings Shares Amount
1/1/12 9,000 P900,000 600,000 P600,000 P1,200,000 P3,198,000
1/6/12 22,500 22,500 348,750
1/31 40,500
2/22 7,500 P180,000
2/28 21,000 21,000 525,000
4/30 (920,000)
5/31
8/31 (12,000) (3,000) (72,000)
9/14 450 450 (1,350)
5,400
11/30 (1,278,900)
12/15 ( 54,000)
12/31 (42,000)
12/31 1,800,000
12/31 9,000 P900,000 643,950 P643,950 P2,118,300 P2,691,100 4,500 P108,000
bal.

January 31:
Value assigned to warrants 1,350,000 x (98% - 95%) = P40,500 (classified as APIC)
Entry on Sept. 14

Cash (450 x 10) 4,500

Share Warrants Outstanding (APIC) 1,350
Ordinary Share 450
Share Premium Ordinary Share 5,400

SUMMATIVE EXERCISE CONQUEST MOTORS CORPORATION

Operating Expenses 2,200

Petty Cash Fund 2,200

Materials Inventory 9,000

Materials Acquisition Fund 9,000

Cash 12,000
Salaries Payable 12,000

Goods in Process Inventory 900

Cash 900

Operating Expenses 1,000

Cash 1,000

Notes Payable 300,000

Interest Expense 18,000
Chapter 9 Shareholders Equity

Cash 318,000

Other Financial Assets 350,000

Cash 350,000

Other Income (Dividend Revenue) 6,600

Trading Securities 6,600

Dividend Receivable 2,000

Other Income 2,000

Trading Securities 12,800

Unrealized Gain on Trading Securities 12,800

Installment Sales 610,000

Cost of Installment Sales 396,500
Deferred Gross Profit 213,500

Deferred Gross Profit 108,500

Realized Gross Profit 108,500

Repossessed Inventory (Finished Goods Inventory) 70,000

Deferred Gross Profit 52,000
Loss on Default 122,000

Materials Inventory 18,000

Accounts Payable 18,000

Goods in Process Inventory 69,600

Applied Factory Overhead 69,600

Factory Overhead Control 30,000

Operating Expenses 20,000
Accumulated Depreciation Building 50,000

Discount on Notes Payable 12,000

Equipment 10,800
Operating Expenses 1,200

Retained Earnings 36,000

Other Assets 36,000

Interest Receivable 16,200

Other Income 16,200

Interest Expense 67,500

Operating Expenses 67,500

Interest Expense 22,500

Chapter 9 Shareholders Equity

Interest Payable 22,500

Share Capital 80,000

Retained Earnings 80,000

Share Capital 250,000

Share Premium 250,000

Retained Earnings 348,000

Dividends Payable 348,000

Operating Expenses 115,000

Accrued Operating Expenses 115,000

Applied Factory Overhead 747,600

Overapplied Factory Overhead 11,600
Factory Overhead Control 736,000

Overapplied Factory Overhead 11,600

Cost of Goods Sold 11,600

Income Statement Correct Balances:

Sales P2,800,000
Cost of goods sold 1,948,400
Gross profit P 851,600
Realized gross profit on installment sales 108,500
Total gross profit P 960,100
Loss from Repossession ( 8,000)
Gross profit, net of loss on repossession P 952,100
Operating Expenses ( 609,500)
Other Income 71,600
Unrealized Gains on Trading Securities 12,800
Other Expenses and Losses ( 36,500)
Income before interest and taxes P 390,500
Interest expense 158,000
Income before income tax P 232,500
Income tax expense 69,750
Net income P 162,750

Balance sheet accounts

Current Assets
Cash P1,015,900
Trading Securities 214,800
Installment Accounts Receivable 340,000
Interest Receivable 16,200
Dividend receivable 2,000
Receivable from officers 45,000
Chapter 9 Shareholders Equity

Inventories 486,500
Prepaid expenses 40,000
Total current assets P2,160,400
Non-current Assets
Property, Plant and Equipment, at cost P5,409,200
Accumulated Depreciation 186,000
Net carrying value P5,223,200
Other Financial Assets 485,000
Total Non-current assets 5,708,200
Total Assets P7,868,600

Current Liabilities
Accounts payable P 508,000
Salaries payable 12,000
Notes payable 538,000
Accrued expenses 115,000
Dividends payable 348,000
Interest payable 22,500
Deferred gross profit 119,000
Income tax payable 69,750
Total current liabilities P1,732,250
Non-current liabilities
Notes payable 1,000,000
Total liabilities P2,732,250

Shareholders Equity
Share Capital P2,900,000
Share Premium 1,450,000
Retained Earnings 692,350 5,042,350
Total Liabilities and Shareholders Equity P7,774,600