SCARLET Corporation has an authorized capital of 10,000 shares of 100 par, 8% cumulative preference share and 20,000 shares of P100 par ordinary share. The equity account balances at December 31, 2021 totaled #1,910,000 broken down as follows: P 500,000 Cumulative preference share capital Ordinary share capital 1,100,000 Share premium 200,000 Retained earnings 260,000 Treasury share, ordinary, 1,000 shares 150,000 Dividends on preference share are in arrears for 2020 and 2021

SCARLET Corporation has an authorized capital of 10,000 shares of 100 par, 8% cumulative preference share and 20,000 shares of P100 par ordinary share. The equity account balances at December 31, 2021 totaled #1,910,000 broken down as follows: P 500,000 Cumulative preference share capital Ordinary share capital 1,100,000 Share premium 200,000 Retained earnings 260,000 Treasury share, ordinary, 1,000 shares 150,000 Dividends on preference share are in arrears for 2020 and 2021

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter10: Stockholder's Equity

Section: Chapter Questions

Problem 5MCQ

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Raun Company had the following equity items as of December 31, 2019: Preferred stock, 9% cumulative, 100 par, convertible Paid-in capital in excess of par value on preferred stock Common stock, 1 stated value Paid-in capital in excess of stated value on common stock| Retained earnings The following additional information about Raun was available for the year ended December 31, 2019: 1. There were 2 million shares of preferred stock authorized, of which 1 million were outstanding. All 1 million shares outstanding were issued on January 2, 2016, for 120 a share. The preferred stock is convertible into common stock on a 1-for-1 basis until December 31, 2025; thereafter, the preferred stock ceases to be convertible and is callable at par value by the company. No preferred stock has been converted into common stock, and there were no dividends in arrears at December 31, 2019. 2. The common stock has been issued at amounts above stated value per share since incorporation in 2002. Of the 5 million shares authorized, 3,580,000 were outstanding at January 1, 2019. The market price of the outstanding common stock has increased slowly but consistently for the last 5 years. 3. Raun has an employee share option plan where certain key employees and officers may purchase shares of common stock at 100% of the marker price at the date of the option grant. All options are exercisable in installments of one-third each year, commencing 1 year after the date of the grant, and expire if not exercised within 4 years of the grant date. On January 1, 2019, options for 70,000 shares were outstanding at prices ranging from 47 to 83 a share. Options for 20,000 shares were exercised at 47 to 79 a share during 2019. During 2019, no options expired and additional options for 15,000 shares were granted at 86 a share. The 65,000 options outstanding at December 31, 2019, were exercisable at 54 to 86 a share; of these, 30,000 were exercisable at that date at prices ranging from 54 to 79 a share. 4. Raun also has an employee share purchase plan whereby the company pays one-half and the employee pays one-half of the market price of the stock at the date of the subscription. During 2019, employees subscribed to 60,000 shares at an average price of 87 a share. All 60,000 shares were paid for and issued late in September 2019. 5. On December 31, 2019, there was a total of 355,000 shares of common stock set aside for the granting of future share options and for future purchases under the employee share purchase plan. The only changes in the shareholders equity for 2019 were those described previously, the 2019 net income, and the cash dividends paid. Required: Prepare the shareholders equity section of Rauns balance sheet at December 31, 2019. Substitute, where appropriate, Xs for unknown dollar amounts. Use good form and provide full disclosure. Write appropriate notes as they should appear in the publisher financial statements.
Selected transactions completed by Equinox Products Inc. during the fiscal year ended December 31, 2016, were as follows: a. Issued 15,000 shares of 20 par common stock at 30, receiving cash. b. Issued 4, 000 shares of 80 par preferred 5% stock at 100, receiving cash. c. Issued 500,000 of 10-year, 5% bonds at 104, with interest payable semiannually. d. Declared a quarterly dividend of 0.50 per share on common stock and 1.00 per share on preferred stock. On the date of record, 100,000 shares of common stock were outstanding, no treasury shares were held, and 20,000 shares of preferred stock were outstanding. e. Paid the cash dividends declared in (d). f. Purchased 7,500 shares of Solstice Corp. at 40 per share, plus a 150 brokerage commission. The investment is classified as an available-for-sale investment. g. Purchased 8,000 shares of treasury common stock at 33 per share. h. Purchased 40,000 shares of Pinkberry Co. stock directly from the founders for 24 per share. Pinkberry has 125,000 shares issued and outstanding. Equinox Products Inc. treated the investment as an equity method investment. i. Declared a 1.00 quarterly cash dividend per share on preferred stock. On the date of record, 20,000 shares of preferred stock had been issued. j. Paid the cash dividends to the preferred stockholders. k. Received 27,500 dividend from Pinkberry Co. investment in (h). l. Purchased 90,000 of Dream Inc. 10-year, 5% bonds, directly from the issuing company, at their face amount plus accrued interest of 37 5. The bonds are classified as a held-to-maturity long -term investment. m. Sold, at 38 per share, 2,600 shares of treasury common stock purchased in (g). n. Received a dividend of 0 .60 per share from the Solstice Corp. investment in (f). o. Sold 1,000 shares of Solstice Corp. at 45, including commission. p. Recorded the payment of semiannual interest on the bonds issue d in (c) and the amortization of the premium for six months. The amortization is determined using the straight-line method . q. Accrued interest for three months on the Dream Inc. bonds purchased in (I). r. Pinkberry Co. recorded total earnings of 240 ,000. Equinox Products recorded equity earnings for its share of Pinkberry Co. net income. s. The fair value for Solstice Corp. stock was 39. 02 per share on December 31, 2016. The investment is adjusted to fair value , using a valuation allowance account. Assume Valuation Allowance for Available-for-Sale Investments h ad a beginning balance of zero. Instructions 1. Journalize the selected transactions. 2. After all of the transaction s for the year ended December 31, 201 6, had been poste d [including the transactions recorded in part (1) and all adjusting entries), the data that follows were taken from the records of Equinox Products Inc. a. Prepare a multiple-step in come statement for the year ended December 31, 201 6, concluding with earnings per share . In computing earnings per share, assume that the average number of common shares outstanding was 100,000 and preferred dividends were 100,000. ( Round earnings per share to the nearest cent.) b. Prepare a retained earnings statement for the year ended December 31, 20 6. c. Prepare a balance sheet in report form as of December 31, 2016.
The shareholders' equity of Laguz Inc. as of January 1, 2021, is as follows: Share Capital Ordinary Shares, P6 par value P1,500,000 1,000,000 shares authorized, 250,000 shares issued and outstanding 820,000 Share Premium - Ordinary Total Share Capital P2,320,000 970,000 Retained Earnings - Unappropriated Total Shareholders' Equity P3,290,000 Transactions for the year 2021 were as follows: Jan. 5 Jan. 10 The board of directors declared a 2-for-1 share split. The board of directors obtained authorization to issue 50,000 non-cumulative 6% preference shares with a par value of P100. Feb. 3 Issued 12,000 ordinary shares for a building appraised at P96,000. Mar. 15 Purchased 8,000 ordinary shares for P64,000. Apr. 6 Issued 20,000 preference shares for P100 per share. Sold 5,000 treasury shares for P35,000. May 10 Jun. 19 Declared cash dividends of P6 per preference share and P0.20 per ordinary share. Jul. 14 Date of record for the dividends. Aug. 18 Sept. 22 Paid the preference and ordinary…
The shareholders' equity of Garnet Corporation on December 31, 2021 showed the following items: 8% Preference Share Capital par P100, 20,000 shares authorized, 16,000 shares issued and outstanding P1,600,000 Ordinary Share Capital par P200, 20,000 shares authorized, 16,000 shares issued and outstanding 3,200,000 Share Premium - Preference 80,000 Share Premium - Ordinary 320,000 Retained Earnings 1,300,000 Dividends declared in 2021 was P800,000. No dividends were declared from January 1, 2018. Determine dividends paid to preference shareholders and ordinary shareholders in total and per share in 2021, assuming preference shares are: 1. non-cumulative, non-participating 2. cumulative, non-participating 3. non-cumulative, fully participating 4. cumulative, fully participating 5. cumulative, participating up to 10% only
Shaina company reported the following shareholders’ equity on December 31, 2019:Preference share capital, 10% cumulative and non participating, P100 par, 10,000 shares P1,000,000Ordinary share capital, P100 par, 20,000 shares 2,000,000Subscribed ordinary share capital, 10,000 shares 1,000,000Subscriptions receivable 250,000Share Premium 500,000Retained Earnings 1,200,000Treasury ordinary shares, 5,000 at cost 400,000 The preference dividends are in arrears for 2017, 2018 and 2019. a. What is the book value per ordinary share? b. What is the book value per preference share?
The equity section of CFAS Company revealed the following information on December 31, 2022: Preference share capital, P100 par P5,000,000 Share premium-preference shares 2,000,000 Ordinary share capital, P50 3,200,000 Share premium-ordinary shares 421,076 Subscribed ordinary share capital 800,000 Retained earnings-appropriated Subscription receivable-ordinary shares 250,000 400,000 Retained earnings- unappropriated 3,500,000 Treasury shares-ordinary 1,000,000 How much is the contributed capital of CFAS Company as of December 31, 2022?
The shareholders' equity of Diamond Corporation on December 31, 2021 follows: Ordinary Share Capital P20 par, 100,000 shares issued P2,000,000 8% Preference Share Capital P50 par, 10,000 shares issued 500,000 Share Premium - Ordinary 200,000 Share Premium - Preference 50,000 Retained Earnings 1,500,000 Total 4,250,000 Compute for the book value per share on preference and ordinary share under each of the following assumptions: a. Preference shares have liquidation value of P60 per share, no dividends in arrears b. Preference shares are cumulative with dividends in arrears for 3 years including the current year, Upon corporate liquidation, shares are preferred as to assets up to par and any dividends in arrears must be paid first before distribution may be made to ordinary shares.
Elston Limited had the following equity accounts on January 1, 2020: Share Capital—Ordinary ($5 par) $400,000, Share Premium—Ordinary $200,000, and Retained Earnings $100,000. In 2020, the company had the following treasury share transactions. Mar. 1 Purchased 5,000 shares at $9 per share. June 1 Sold 500 shares at $12 per share. Sept. 1 Sold 2,500 shares at $10 per share. Dec. 1 Sold 1,000 shares at $6 per share. Elston uses the cost method of accounting for treasury shares. In 2020, the company reported net income of $34,000. Instructions: a. Journalize the treasury share transactions, and prepare the closing entry at December 31, 2020, for net income. b. Post the journal related to these accounts: (1) Share Premium—Treasury, (2) Treasury Shares, and (3) Retained Earnings. Ese a formal form of General Ledger. c. Prepare the equity section for Elston Limited at December 31, 2020.
COMPUTE FOR YOUR BASIC EARNING PER SHARE * BASIC EARNINGS PER SHARE Entity A had 50, 000, P15 PAR, 10% cumulative preference shares outstanding all throughout 2021. Entity a reortea a profit after tax P 1, 250, 000for the year ended December 31, 2021. The movements in the number of shares are as follows: 1/1/2021 Ordinary shrres outstanding 3/1/2021 Share issued for cash 6/30/2021 Subscribed shares 9/30/2021 Reacquisition of treasury shares . 180, 000 50, 000 20, 000 (12 000) 238, 000
Del Valle Company provided the following shareholders’ equity on December 31, 2021: Preference share capital, 10% P50 par (cumulative and nonparticipating) 1,000,000 Preference share capital, 8% P50 par (noncumulative and participating) 1,500,000 Ordinary share capital, P100 2,500,000 Share premium 500,000 Retained earnings 600,000 Dividends have been paid on the preference share up to December 31, 2018.compute the book value per ordinary share
ABC has an authorized capital of 1,000, P100 par, 8% cumulative preference shares and 100,000, P10 par, ordinary shares. The equity account balances at December 31, 2022, are as follows:Cumulative preference share 50,000Ordinary share - 90,000Share premium - 9,000Retained earnings - 13,000Treasury shares, ordinary – 100 shares at cost - 2,000Dividends on preferred stock are in arrears for the year 2022. The book value per ordinary share at December 31, 2022, should be
Joy Ashliy Company reported the following amounts in the shareholders' equity section Of its December 31, 2020, statement of financial position: Preference share, P 100 par (10,000 shares authorized, 4,000 shares issued - P 400,000Ordinary share, P5 par (100,000 shares authorized 40,000 shares issued - P200,000Share premium - P250,000Retained earnings - P900,000TOTAL = 1,750,000 During 2021' the following transactions transpired concerning shareholders' equity: 1) paid the annual P10 per share dividend on preference share and a P2 per share dividend on ordinary share. These dividends had been declared onDecember 31, 2020.2) purchased 5,000 shares of its own outstanding ordinary share for P40 per share3) Reissued 2,000 treasury shares for land valued at P 100,000.4) Issued 4,000 preference shares with detachable warrants. The package sellsfor P 120. The warrants enable the holder to purchase 2,000 ordinary shares at P30 per share. Immediately after the issuance of the share, the…