a. Compute the book value of the ordinary shares at December 31, 2023. b. Compute the book value of the ordinary shares at December 31, 2023, assuming that the preference shares have a liquidating value of P106 per share.
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- On January 1, 2019, Kittson Company had a retained earnings balance of 218,600. It is subject to a 30% corporate income tax rate. During 2019, Kittson earned net income of 67,000, and the following events occurred: 1. Cash dividends of 3 per share on 4,000 shares of common stock were declared and paid. 2. A small stock dividend was declared and issued. The dividend consisted of 600 shares of 10 par common stock. On the date of declaration, the market price of the companys common stock was 36 per share. 3. The company recalled and retired 500 shares of 100 par preferred stock. The call price was 125 per share; the stock had originally been issued for 110 per share. 4. The company discovered that it had erroneously recorded depreciation expense of 45,000 in 2018 for both financial reporting and income tax reporting. The correct depreciation for 2018 should have been 20,000. This is considered a material error. Required: 1. Prepare journal entries to record Items 1 through 4. 2. Prepare Kittsons statement of retained earnings for the year ended December 31, 2019.Net Income and Comprehensive Income At the beginning of 2019, JR Companys shareholders equity was as follows: During 2019, the following events and transactions occurred: 1. JR recognized sales revenues of 108,000. It incurred cost of goods sold of 62,000 and operating expenses of 12,000, 2. JR issued 1,000 shares of its 5 par common stock for 14 per share. 3. JR invested 30,000 in available-for-sale securities. At the end of the year, the securities had a fair value of 35,000. 4. JR paid dividends of 6,000. The income tax rate on all items of income is 30%. Required: 1. Prepare a 2019 income statement for JR which includes net income and comprehensive income ignore earnings per share). 2. For 2016 prepare a separate (a) income statement (ignore earnings per share) and (b) statement of comprehensive income.Contributed Capital Adams Companys records provide the following information on December 31, 2019: Additional information: 1. Common stock has a 5 par value, 50,000 shares are authorized, 15,000 shares have been issued and are outstanding. 2. Preferred stock has a 100 par value, 3,000 shares are authorized, 800 shares have been issued and are outstanding. Two hundred shares have been subscribed at 120 per share. The stock pays an 8% dividend, is cumulative, and is callable at 130 per share. 3. Bonds payable mature on January 1, 2023. They carry a 12% annual interest rate, payable semiannually. Required: Prepare the Contributed Capital section of the December 31, 2019, balance sheet for Adams. Include appropriate parenthetical notes.
- Watusi Inc. began operations in January 2021 and reported the following results for each of its 3 years of operations. P260,000 net loss P40,000 net loss P700,000 net income 2021 2022 2023 At December 31, 2023, Watusi Inc. share capital accounts were as follows. Share Capital-Preference, 6% cumulative, par value P100; authorized, issued, and outstanding 5,000 shares Share Capital-Ordinary, par value P1.00; authorized 1,000,000 shares; issued and outstanding 750,000 shares P260,000 750,000 Watusi Inc. has never paid a cash or share dividend. There has been no change in the share capital accounts since Watusi began operations. The country law permits dividends only from retained earnings. Instructions a. Compute the book value of the ordinary shares at December 31, 2023. b. Compute the book value of the ordinary shares at December 31, 2023, assuming that the preference shares have a liquidating value of P106 per share.An entity began operations January 1, 2015 and reported the following net income or loss for five years of operations: 2015 1,500,000 loss 2016 1,300,000 loss 2017 1,200,000 loss 2018 4,500,000 income 2019 9,000,000 income On December 31, 2019, the capital accounts were: Preference share capital, P100 par, 12% participating and cumulative, 100,000 shares 10,000,000 Preference share capital P100 par, 10% nonparticipating, Noncumulative, 50,000 shares 5,000,000 Ordinary share capital, P10 par, 1,000,000 shares 10,000,000 The entity has never paid cash or share dividend. The capital accounts have not changed since the entity began operations. If the maximum amount available for cash dividends is declared on December 31, 2019, what amount of dividend is payable to 12% Preference Shareholders? 10% Preference Shareholders?The Statement of Financial Position (SFP) of Arthur Corporation on June 30, 202X is presented below:Current Assets P195,000Land 1,320,000Building 660,000Equipment 525,000Total Assets P2,700,000Liabilities P525,000Ordinary Shares, P5 par 900,00Share Premium 825,000Retained Earnings 450,000Total Equities P2,700,000All the assets and liabilities of Arthur were assumed to approximate their fair values except for land and building. It is estimated that the land has a fair value of P2,100,000, and the fair value of the building increased by P480,000. Ezekeil Corporation acquired 80% of Arthur’s outstanding shares for P3,000,000. The non-controlling interest is measured at fair value.Required:a. Determine the goodwill or gain on bargain purchase assuming the consideration paid includes control premium of P852,000. Determine the goodwill or gain on bargain purchase assuming the consideration paid excludes control premium of P138,000 and the fair value of the non-controlling interest is…
- The equity section of Whispering Inc. at January 1, 2022, was as follows. Share capital-ordinary $390,000 Accumulated other comprehensive income Unrealized holding gain on equity securities designated at fair value through other comprehensive income 65,000 Retained earnings 26,000 During the year, the company had the following transactions. 1. Issued 13,000 shares at $3 per share. 2. Dividends of $12.200 were declared and paid. 3. Net income for the year was $130,000. Unrealized holding loss of $6,500 occurred on its equity securities designated at fair value through other comprehensive 4. income. Prepare a statement of changes in equity for Whispering Inc. WHISPERING INC.Ared Company showed the following shareholders’ equity on January 1, 2020: Share capital 1,000,000 Share premium 2,000,000 Retained earnings 4,000,000 The entity had 400,000 authorized shares of P5 par value, of which 200,000 shares were issued and outstanding. On July 1, 2020, the entity declared a property dividend of inventory payable on March 1, 2021. The inventory had a P1,200,000 carrying amount and a fair value less cost to distribute of P1,000,000 on July 1, 2020. The fair value less cost to distribute is P1,500,000 on December 31, 2020, and P900,000 on March 1, 2021. The net income for 2020 was P3,000,000. - What is the carrying amount of the inventory on December 31, 2020? - What is the amount to be recognized in profit or loss for the distribution of the non- cash dividend?Ared Company showed the following shareholders’ equity on January 1, 2020: Share capital 1,000,000 Share premium 2,000,000 Retained earnings 4,000,000 The entity had 400,000 authorized shares of P5 par value, of which 200,000 shares were issued and outstanding. On July 1, 2020, the entity declared a property dividend of inventory payable on March 1, 2021. The inventory had a P1,200,000 carrying amount and a fair value less cost to distribute of P1,000,000 on July 1, 2020. The fair value less cost to distribute is P1,500,000 on December 31, 2020, and P900,000 on March 1, 2021. The net income for 2020 was P3,000,000. - What amount should be reported as retained earnings on December 31, 2020? - What is the dividend payable on December 31, 2020?
- Kremlin Company reported the following shareholders' equity at year-end: Share capital, P30 par value, P3,000,000; Share premium, P600,000; Retained earnings, P4,200,000. A 20% share dividend was declared and distributed at year-end when entity's share was selling at P65. What amount should be reported as share capital outstanding?Cabuslay Company showed the following shareholders’ equity on December 31, 2021: Ordinary share capital, P100 par 2,000,000 Preference share capital, 8% P50 par, cumulative and participating 2,500,000 Preference share capital, 10% P50 par, noncumulative and participating 1,500,000 Retained earnings 270,000 Dividends are in arrears for two years, and preference share has preference as to assets.Compute the Book value per ordinary shareThe extract of statement of financial position for the year ended 30 June 2022 for Pears Ltd and Sapodille Ltd are as follows: Extract of statement of financial position for the year ended 30 June 2022 Equity and liabilities Pears Ltd Sapodille LtdEquity $ $ Share capital ($ 1 Each) 487,500 420,000Share premium 300,000 -Retained earnings 262,500 337,500LiabilitiesNon current liabilities 187,500 75,000Current liabilities 150,000 15,000 On 01 July…