Accounting Business Financial Accounting Statement I: Outstanding shares are unissued and issued shares currently held by stockholders. Statement II: If the company uses the journal entry...

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Question 1. Statement I: Outstanding shares are unissued and issued shares currently held by stockholders. Statement II: If the company uses the journal entry method, issuance of share capital ... for cash should be recorded with a credit to Unissued Share Capital account. a. True, False b. False, True c. True, True d. False, False 2. Statement I: In the case of no-par value share capital, legal capital is the aggregate stated value of shares issued and subscribed plus any excess over stated value. Statement II: The purchase of treasury shares increases the number of shares issued but it reduces the number of shares outstanding. a. True, False b. False, True c. True, True d. False, False 3. Assuming all of the following are reliably determinable, the best basis to measure the non-cash asset received by a corporation in exchange for shares issued is the a. Par value of the shares issued b. Fair value of the shares issued c. Carrying value in the books of the shareholder of the non-cash asset contributed d. Fair value of the non-cash asset received 4. Transaction costs incurred by the corporation relating to issue of shares may not be a. Charged against the related share premium b. Charged to an expense account c. Written off directly against share capital d. Taken to profit or loss 5. When subscription is made at a price in excess of the par value of the share capital, a. The share premium is recognized at the date of the subscription. b. The share premium is recognized at the date of the subscription price only if fully collected. c. No entry is made, except if a down payment is collected. d. Share capital account is credited equal to the subscription price. 6. Which of the following transactions is recorded in the same manner under both the journal entry method and memorandum entry method? A. Receipt of authorization to issue share capital B. Receipt of share capital subscription C. Issue of share capital previously subscribed D. Sale for cash of share capital. 7. What is the effect on share premium and retained earnings, respectively, of the purchase of treasury shares at an amount above par value? A. No effect, no effect B. Increase, no effect C. Decrease, decrease D. Decrease, no effect 8. Which of the following result in an increase in share premium? A. Purchase of treasury shares at above par value B. Purchase of treasury shares below par C. Sale of the treasury shares at an amount higher than the acquisition cost D. Sale of treasury shares at an amount lower than the acquisition cost 9. The par value of a share capital is A. The present value of the share B. The liquidation value of the share C. The legal nominal value assigned to the share D. The amount received by the corporation when the share capital was originally issued 10. In case there are no bidders for the delinquent shares, A. The shares will be issued in the name of the corporation as treasury shares B. The corporation will issue a proportionate number of shares to the defaulting subscriber. C. The shares will be issued to the original subscriber D. The subscription will be cancelled and the amount previously collected will be returned to the original subscriber 11. The following information relate to the records of RAZON CO. Authorized Ordinary Shares , 500,000 shares, P20 par Ordinary Share Capital P5,000,000 Ordinary Shares Subscribed Capital 2,400,000 Ordinary Shares Subscriptions Receivable 1,200,000 Ordinary Share Premium 1,480,000 The Ordinary Shares Subscribed of P2,400,000 refers to subscriptions made by 10 persons. Each of the ten subscribers subscribed to an equal number of shares at par and each one made a fifty percent payment on their subscriptions. Assuming four of the ten subscribers of RAZON CO. who still have a balance payable on their subscriptions made full payment, how many shares of ordinary share capital will be issued? A. 60,000 shares B. 48,000 shares C. 120,000 shares D. none of the choices provided 12. CARNE issued 60,000 shares of P100 stated value in exchange for land and factory building with total fair value of P9 million pesos. The value of land is thrice as much as the value of the building. What would be the entry of CARNE to record the transaction? A. Land 4,500,000 Building 1,500,000 Share Capital 6,000,000 B. Building 4,500,000 Land 4,500,000 Share Capital 6,000,000 Share Premium 3,000,000 C. Land 6,750,000 Building 2,250,000 Share Capital 6,000,000 Share Premium 3,000,000 D. Land 6,750,000 Building 2,250,000 Share Capital 9,000,000 13. On September 1, BRAZZIL issued 6,000 shares with par value of P50 par ordinary shares to Atty. Warl for 200 hours of legal consultation. Based on the website of Atty. Warl, the rate of his service is usually P2,000 per hour. On the website of Philippine Stock Exchange (PSE), the shares are quoted at P60 per share on that date of issuance. What journal entry should BRAZZIL record on its books related to the issuance? A. Professional expenses 360,000 Share capital 300,000 Share premium 60,000 B. Professional expenses 360,000 Share capital 360,000 C. Professional expenses 400,000 Share capital 300,000 Share premium 100,000 D. Professional expenses 400,000 Share capital 400,000 14. The December 31, 2020 condensed Statement of Financial Position of SUPERSTAR Entertainment Services, a sole proprietorship of TRAP follows: Current Assets P 2,800,000 Property, Plant and Equipment - net 2,600,000 P 5,400,000 Liabilities P 1,400,000 TRAP, Capital 4,000,000 P 5,400,000 On January 15, 2020, SUPERSTAR Entertainment Services was incorporated with 20,000 shares of P100 par value common shares issued. Prior to incorporation, Mr. TRAP had determined the following fair market values: Current Assets P 3,200,000 Property, Plant and Equipment 4,200,000 Liabilities 1,400,000 What amount should be credited to Share Premium upon incorporation? A. P2,000,000 B. P3,400,000 C. P5,400,000 D. P4,000,000 15. On February 14, 2020 DAVID Co. issued 60,000 shares of its P100 par value ordinary shares and 40,000 shares of its P50 par value preference shares for a total amount of P9,000,000. As of February 14, DAVID's ordinary shares were trading at P140 while its preference shares were selling at P90 per share. At what amount would the "Share Premium-Preference" account would increase as a result of the transaction? a. 250,000 b. 700,000 c. 1,521,739 d. 2,500,000 16. The following accounts are found in the trial balance of HUSKY Inc. at December 31, 2020. Preference Share Capital, P100 par, 40,000 shares authorized; 10,000 shares issued Ordinary Share Capital, P10 stated value, 200,000 shares authorized; 55,000 shares issued Subscribed Preference Share P400,000 Subscribed Ordinary Share 160,000 Additional Paid-in Capital - Preference 120,000 Additional Paid-in Capital - Ordinary 84,000 What is the total legal capital of HUSKY Inc. as of December 31, 2020? A. P2,110,000 B. P2,194,000 C. P2,230,000 D. P2,314,000 17. Rixal Inc. is authorized to issue P10 par ordinary share capital. The company received subscription from Mr. Bathrum for 15,000 shares at P15 per share. Mr. Bathrum paid 30% down payment and the balance is payable at the end of 60 days. After several calls, Mr. Bathrum failed to pay the balance of his subscription. Thirty days after the due date, the shares were declared delinquent and were advertised for sale at a public auction. Expenses incurred for advertising the sale amounted to P4,500, which were duly paid by the corporation. What amount would be the total receivable from the highest bidder? A. P162,000 B. P157,500 C. P225,000 D. P229,500 18. Lexus Corporation purchased 15,000 shares of its P1 par ordinary shares at P10 and subsequently sold 10,500 shares at P20. What is the amount of gain realized from the sale that will be reported in the statement of comprehensive income? A. P94,500 B. P105,000 C. P135,000 D. P0 19. The articles of incorporation of Abby Corp. provides for the issuance of 150,000 shares of ordinary shares. Assume that 60,000 shares were originally issued and 7,500 were subsequently reacquired. Outstanding shares would be? A. 7,500 B. 52,500 C. 67,500 D. 82,500 20. Bisnar Co. has the following information relating to its shareholders equity as of January 1, 2020. Share capital, 300,000 authorized, P50 par value, 225,000 shares issued, 15,000 held in treasury P11,250,000 Share premium - ordinary 900,000 Retained earnings 3,000,000 Treasury shares, at cost 825,000 The following events transpired in 2020: · On March 31, 2020, Bisnar reissued 3,000 of its treasury shares for P59 per share. · On June 1, 2020, Bisnar reissued 3,750 of its treasury shares for P50 each · On December 1, 2020, Bisnar retired 1,500 ordinary shares for P49 per share. In relation to June 1, 2020 transaction, what is the journal entry of Bisnar Co. to record the transaction? a. Cash 187,500 Treasury shares 187,500 b. Cash 187,500 Retained earnings 18,750 Treasury shares 206,250 c. Cash 187,500 Share premium - treasury 12,000 Retained earnings 6,750 Treasury shares 206,250 d. Treasury shares 206,250 Cash 187,500 Share premium - treasury 12,000 Retained earnings 6,750 21. Leony Corporation has 7,500 ordinary shares in its treasury with par value of P100 and cost of P120. The shares were originally issued for P110 per share. The account "Share premium - Treasury" had a balance of P30,000. At the end of 2020, Leony decided to retire its treasury shares. Which of the following is incorrect? A. Ordinary shares and Share Premium -ordinary will be debited by P750,000 and P75,000, respectively, as a result of the retirement of treasury shares. B. Retained earnings will be debited by P75,000 when the treasury shares are retired. C. Treasury shares account will be credited by P900,000 upon retirement. D. Share premium - Treasury will have no balance at the end of the year after the retirement had been recorded. 22. Demis Corporation is authorized to issue P10 par ordinary share capital. Assume the following transactions were completed by Demis Corporation with Mr. Valdez, a subscriber. · Received subscription from Mr. Valdez for 15,000 shares at P15 per share. Terms: 30% down and the balance is payable at the end of 60 days. · After several calls, Mr. Valdez failed to pay the balance of his subscription. Thirty days after the due date, the shares were declared delinquent and were advertised for sale at a public auction. · Expenses for advertising the sale amounted to P4,500, which were duly paid by the corporation. · Received bids from the following: § Robert 12,000 shares § Marilou 9,000 shares § Anna 10,500 shares · The amount due from the highest bidder is collected, and certificates of share capital were accordingly issued. Upon issuance of the stock certificates, how many shares are received by Ms. Marilou and Mr. Valdez respectively? a. 9,000 shares to Marilou and 6,000 shares to Valdez b. 10,500 shares to Marilou and 4,500 shares to Valdez c. 6,000 shares to Marilou and 9,000 shares to Valdez d. All 15,000 shares to Marilou e. All 15,000 shares to Valdez 23. Halo Corporation was organized on January 1, 2020, with an authorization of 1,500,000 ordinary shares with a par value of P5 per share. During 2020, the corporation had the following equity transactions: Jan. 4 - Issued 300,000 shares @ P5 per share. April 8 - Issued 150,000 shares @ P7 per share. June 9 - Issued 45,000 shares @ P10 per share July 29 - Purchased 75,000 shares @ P4 per share. Dec. 31 - Sold 75,000 shares held in treasury @ P8 per share. What should be the total Share Premium as of December 31, 2020? a. P600,000 b. P675,000 c. P750,000 d. P825,000 24. The Nani Corporation is authorized to issue 150,000 ordinary shares, P17 par value. At the beginning of 2020, 27,000 ordinary shares were issued and outstanding. These shares had been issued at P24. During 2020, the company entered into the following transactions: Jan. 16 - Issued 1,950 ordinary shares at P25 per share. Mar. 21 - Exchanged 18,000 ordinary shares for a building. The ordinary shares were selling at P27 per share. May 7 - Reacquired 750 ordinary shares at P26 per share to be held in treasury. July 1 - Accepted subscriptions to 1,500 ordinary shares at P28 per share. The contract called for 10% down payment with the balance due on December 1. Sept. 20 - Sold 750 treasury shares at P29 per share. Dec. 1 - Collected the balance due on July 1 subscriptions and issued the shares. Total contributed capital for December 31, 2020 is a. P922,500 b. P1,227,000 c. P920,250 d. P1,224,750 25. ATD Company issued all of its outstanding shares for P150 in 2018. On January 10, 2019, ATC acquired 150,000 treasury shares at P120 per share. ATC reissued 75,000 treasury shares for P7,500,000 on June 30, 2020 and retired the rest on December 31, 2020. ATC's selected equity accounts as at December 31, 2019 follow: Share capital, P100 par value P225,000,000 Share premium 112,500,000 Retained earnings 37,500,000 What shall be the balance of share capital account on December 31, 2020? a. P210,000,000 b. P216,000,000 c. P217,500,000 d. P225,000,000 26. LUNA Co. has the following information related to its accounts as of December 31, 2020: Ordinary share capital, P50 par value P1,500,000 Preference share capital, P30 par value 675,000 Share premium - ordinary 600,000 Share premium - preference 180,000 Retained earnings 375,000 Treasury shares - ordinary, P55 cost per share 412,500 What is the number of issued and outstanding shares for ordinary shares and preference shares respectively? A. 30,000 shares; 22,500 shares B. 30,000 shares; 15,000 shares C. 22,500 shares; 15,000 shares D. 22,500 shares; 22,500 shares 27. The shareholders' equity of Jude shows the following information as of December 31, 2020 Share capital - ordinary P3,000,000 Share premium - ordinary 300,000 Subscribed capital - ordinary 750,000 Subscription receivable 225,000 Retained earnings 450,000 Treasury shares, at cost 150,000 What amount of shareholder's equity should Jude report as of December 31, 2020? A. P4,125,000 B. P4,350,000 C. P4,575,000 D. P4,875,000 28. The stockholders' equity of Dennis at the end of 2020 and 2019 are as follows: 2020 2019 Preferred stock, P100 par, 12% P1,500,000 P 900,000 Common stock, P20 par 3,000,000 2,700,000 Share premium Preferred 24,000 - Common 6,525,000 5,625,000 Retained earnings 120,000 270,000 How many shares of preferred stock were issued in 2020 and at what price, respectively? A. 15,000 shares; P104 B. 15,000 shares; P100 C. 6,000 shares; P104 D. 6,000 shares; P100 29. Data from the statement of financial position of Alpha Builders Corp. shows Unissued share capital of P40,000; Authorized share capital P100,000; Share premium, P4,000; Subscriptions Receivable P16,000; and Subscribed share capital P30,000. How much total cash was collected from the sale and subscription of shares? a. P78,000 b. P88,000 c. P104,000 d. Some other answer. 30. In 2019, NCTEX Incorporated issued 75,000 shares of P10 par value for P100 per share. In 2020, the entity reacquired 3,000 shares at P150 per share and immediately cancelled these 3,000 shares. In relation with the retirement of shares, what amount should be debited to share premium and retained earnings respectively? a. P30,000 and P420,000 b. P150,000 and P270,000 c. P270,000 and P150,000 d. P420,000 and 0 [Show More]

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