1.

Bane Company issued 10,000 ordinary shares with a P20 par value and 20,000 convertible preference shares with a
P20 par value at the start of the year for a total of P800,000. The convertible preference share was selling for P27 at
this time, while the ordinary share was going for P36.

What amount of the proceeds should be allocated to the preference shares?

What amount of the proceeds should be allocated to the ordinary shares?

What amount should be recorded as share premium from the issuance of preference shares?

What amount should be recorded as share premium from the issuance of ordinary shares?

2. On February 1, Seth Company acquired 20,000 shares of another entity's 6% cumulative P20 par value preference
share for P420,000. For every two warrants held, the holder of a preference share was entitled to purchase at P15
one ordinary share of the other entity's ordinary shares with a P10 par value. The market price of the preferred
share without a warrant was P50 on this date, whereas the market price of the preferred share with a warrant was
P10. All of the share warrants were sold for P300,000 on June 30.

What amount should be recognized as investment in share warrants?

What amount should be recognized as gain on sale of warrants?

3. 6% bonds with a P6,000,000 maturity value and 10,000 common shares with a P50 par value were issued at the start
of the current year by the privately held Heart Company for a total cash sum of P11,000,000. The bonds would have
sold for P4,000,000 at an 8% yield to maturity if they had been offered separately.

What amount of the proceeds should be allocated to the ordinary shares?

What amount should be reported for share premium on issuance of the ordinary shares?

4. Colorado, Inc was established on January 1st, 2021, with the following authorized capitalization:

Ordinary share capital, 200,000 shares, no par value, P100 stated value, 20,000,000.

P50 par value, 200,000 shares, 10% fixed rate, preference share capital, 10,000,000.

The company issued 50,000 preference shares at P60 per share and 150,000 common shares for a total of
P18,000,000 in 2021. Additionally, subscriptions for 20,000 preference shares were accepted at a purchase price of
P100 on December 15, 2021. On January 15, 2022, these subscribed shares were paid for. For 2021, net income was
P5,000,000.

What amount should be reported as total contributed capital on December 31, 2021?

5. Ring Company issued 8,000 convertible preference shares with a par value of P100 during the current fiscal year for
P105 per share. The preference shareholder has the opportunity to convert one preference share into three
 ordinary shares with a par value of P25. All of the preference shares were converted into common shares in the
latter half of the year. The ordinary share had a market value of P30 on the conversion date.

What total amount should be credited to share premium as a result of the issuance of the preference shares and
their subsequent shares and their subsequent conversion into ordinary shares?

6. Storm Company issued 15,000 convertible preference shares with a par value of P100 during the current fiscal year
for P110 per share. The preference shareholder has the opportunity to convert one preference share into three
ordinary shares with a par value of P25. All of the preference shares were converted into common shares at year's
end. At the conversion date, the ordinary share's market value was P40.

What amount should be credited to ordinary share capital as a result of conversion?

What amount should be credited to share premium as a result of conversion?

7. Crabs Company reacquired 10,000 P10 par value shares on hand for P120,000. All 10,000 shares were reissued by
the company for P180,000 at year's end.

What equity account and amount is credited for the excess of the reissue price over the cost of treasury shares?

8. At a price of P10 per share, Indigo Company issued 200,000 shares with a P5 par value. Retained earnings were
P3,000,000. At the start of the current year. The company needed 50,000 treasury shares in March, each worth P20.
10,000 of these shares were sold by the entity to corporate officers for P25 in June. Treasury shares were recorded
using the cost method by the corporation. The current year's net income was P600,000.
What total amount should be reported as retained earnings at year-end?

What amount should be reported as unappropriated retained earnings at year-end?

9. On 100,000 issued and outstanding shares of P20 par value (which had a fair value of P50 per share prior to the
share dividend being declared), Sugar Company declared a 5% share dividend. Sixty days following the declaration,
this share dividend was distributed.

What amount should be reported as increase in current liabilities as a result of the share dividend declaration?

10. Magic Company issued 125,000 shares at the start of the current year, of which 25,000 were kept in treasury.
Officers received 13,000 treasury shares as part of a share compensation plan from January 1 to October 31. A 3-for-
1 share split became effective on November 1. To thwart a hostile takeover, the corporation bought 5,000 of its own
shares on December 1. They didn't retire these shares.

How many shares were issued at year-end?

How many shares were outstanding at year-end?