During 2021, FALCON Company issued 50,000 shares of ₱100 par value convertible preference share capital for ₱120 per share. One preference share can be converted into three ordinary shares with ₱10 par value at the option of the preference share shareholder. On December 31, 2021, when the market value of the ordinary share was ₱50 per share, all of the preference share capital was converted. What amount should FALCON credit to ordinary share capital and share premium as a result of the conversion? a. ₱ 1,500,000 and 6,000,000b. ₱ 1,500,000 and 0c. ₱ 1,500,000 and 4,500,000d. ₱ 1,500,000 and 3,500,000

Ordinary share capital = No. of preference shares x conversion ratio x par value per ordinary…

Answered: During 2021, FALCON Company issued…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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During 2021, FALCON Company issued 50,000 shares of ₱100 par value convertible preference share capital for ₱120 per share. One preference share can be converted into three ordinary shares with ₱10 par value at the option of the preference share shareholder. On December 31, 2021, when the market value of the ordinary share was ₱50 per share, all of the preference share capital was converted. What amount should FALCON credit to ordinary share capital and share premium as a result of the conversion?

a. ₱ 1,500,000 and 6,000,000

b. ₱ 1,500,000 and 0

c. ₱ 1,500,000 and 4,500,000

d. ₱ 1,500,000 and 3,500,000

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