5. XYZ Company had the following shareholders' equity on January 1, 2020 Preference Share Capital, P100 par, 10% ------ 2,000,000 Ordinary Share Capital, no par, P5 Stated Value --- 5,150,000 Share Premium Retained Earnings Treasury Ordinary Shares 3,500,000 - 4,000,000 - 400,000 On January 15, 2020, the entity formally retired all the 30,000 treasury shares The treasury shares were originally issued at P10 per share The entity owned 10,000 shares of Lalamove Company purchased for P800,000. This Lalamove shares were included in non-current equity securities. On December 31, 2020, the entity declared a dividend in kind of one share of Lalamove for every hundred ordinary shares held by a shareholder The fair value of the Lalamove share is P90 on December 31, 2020. The dividend in kind was distributed on March 15, 2021 when the fair value of Lalamove is P95 On December 31, 2020 the entity declared the yearly cash dividend on preference share payable on January 15, 2021. On January 15, 2021, before the accounting records were closed for 2020, the entity became aware that rent income for the year ended December 31, 2019 was overstated by P1,000,000 The after-tax effect on 2023 net income was P700,000 After correcting the rent income, net income for 2020 was P3,000,000 5.1.What amount should be charged the retained earnings for the retirement of treasury shares on January 15, 2020? 5.2. What amount should be charged to retained earnings for the property dividend on ordinary shares on December 31, 2020? 5.3.What amount should be charged to retained earnings for the preference dividend declared on December 31, 2020? 5.4 What amount should be reported as retained earnings on December 31, 2020?
5. XYZ Company had the following shareholders' equity on January 1, 2020 Preference Share Capital, P100 par, 10% ------ 2,000,000 Ordinary Share Capital, no par, P5 Stated Value --- 5,150,000 Share Premium Retained Earnings Treasury Ordinary Shares 3,500,000 - 4,000,000 - 400,000 On January 15, 2020, the entity formally retired all the 30,000 treasury shares The treasury shares were originally issued at P10 per share The entity owned 10,000 shares of Lalamove Company purchased for P800,000. This Lalamove shares were included in non-current equity securities. On December 31, 2020, the entity declared a dividend in kind of one share of Lalamove for every hundred ordinary shares held by a shareholder The fair value of the Lalamove share is P90 on December 31, 2020. The dividend in kind was distributed on March 15, 2021 when the fair value of Lalamove is P95 On December 31, 2020 the entity declared the yearly cash dividend on preference share payable on January 15, 2021. On January 15, 2021, before the accounting records were closed for 2020, the entity became aware that rent income for the year ended December 31, 2019 was overstated by P1,000,000 The after-tax effect on 2023 net income was P700,000 After correcting the rent income, net income for 2020 was P3,000,000 5.1.What amount should be charged the retained earnings for the retirement of treasury shares on January 15, 2020? 5.2. What amount should be charged to retained earnings for the property dividend on ordinary shares on December 31, 2020? 5.3.What amount should be charged to retained earnings for the preference dividend declared on December 31, 2020? 5.4 What amount should be reported as retained earnings on December 31, 2020?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:5. XYZ Company had the following shareholders' equity on January 1, 2020
Preference Share Capital, P100 par, 10% ------ 2,000,000
Ordinary Share Capital, no par, P5 Stated Value --- 5,150,000
Share Premium
Retained Earnings
Treasury Ordinary Shares
3,500,000
- 4,000,000
- 400,000
On January 15, 2020, the entity formally retired all the 30,000 treasury shares
The treasury shares were originally issued at P10 per share
The entity owned 10,000 shares of Lalamove Company purchased for P800,000. This Lalamove shares were included in non-current
equity securities.
On December 31, 2020, the entity declared a dividend in kind of one share of Lalamove for every hundred ordinary shares held by a
shareholder
The fair value of the Lalamove share is P90 on December 31, 2020. The dividend in kind was distributed on March 15, 2021 when the
fair value of Lalamove is P95
On December 31, 2020 the entity declared the yearly cash dividend on preference share payable on January 15, 2021.
On January 15, 2021, before the accounting records were closed for 2020, the entity became aware that rent income for the year
ended December 31, 2019 was overstated by P1,000,000
The after-tax effect on 2023 net income was P700,000
After correcting the rent income, net income for 2020 was P3,000,000
5.1.What amount should be charged the retained earnings for the retirement of treasury shares on January 15, 2020?
5.2.What amount should be charged to retained earnings for the property dividend on ordinary shares on December 31, 2020?
5.3.What amount should be charged to retained earnings for the preference dividend declared on December 31, 2020?
5.4 What amount should be reported as retained earnings on December 31, 2020?
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