II. The stockholders’ equity of Adviento Corporation showed the following data on December 31, 2014: 12% preferred stock, P30 par, 135,000 shares issued and outstanding P4,050,000 Common stock, P50 par, 180,000 shares issued and outstanding 9,000,000 Premium on preferred stock 1,080,000 Premium on common stock 3,240,000 Retained earnings 1,395,000 The 2015 transactions of the company affecting its stockholders’ equity are summarized chronologically as follows: a. Issued 27,000 shares of preferred stock at P40. b. Issued 94,500 shares of common stock at P70. c. Retired 5,400 shares of preferred stock at P45. d. Purchased 13,500 shares of its common stock at P80. e. Split common stock two for one (par value reduce to P25). f. Reissued 13,500 shares of treasury stock – common at P50. g. Stockholders donated to the company 9,000 shares of common stock when shares had a market price of P52. One half of these shares were subsequently issued for P54. h. Dividends were paid at the end of the calendar year on the common stock at P2 per share and on the preferred stock at the preferred rate. i. Net income for the year was P2,520,000. QUESTIONS: Based on the above and the result of your audit, determine the following as of December 31, 2015: 11. Preferred stock 12. Common stock 13. Additional paid-in capital 14. Unappropriated retained earnings 15. Total stockholders’ equity
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
II. The
12% preferred stock, P30 par, 135,000 shares issued and outstanding P4,050,000
Common stock, P50 par, 180,000 shares issued and outstanding 9,000,000
Premium on preferred stock 1,080,000
Premium on common stock 3,240,000
The 2015 transactions of the company affecting its stockholders’ equity are summarized chronologically as follows:
a. Issued 27,000 shares of preferred stock at P40.
b. Issued 94,500 shares of common stock at P70.
c. Retired 5,400 shares of preferred stock at P45.
d. Purchased 13,500 shares of its common stock at P80.
e. Split common stock two for one (par value reduce to P25).
f. Reissued 13,500 shares of
g. Stockholders donated to the company 9,000 shares of common stock when shares had a market
price of P52. One half of these shares were subsequently issued for P54.
h. Dividends were paid at the end of the calendar year on the common stock at P2 per share and on
the preferred stock at the preferred rate.
i. Net income for the year was P2,520,000.
QUESTIONS:
Based on the above and the result of your audit, determine the following as of December 31, 2015:
11. Preferred stock
12. Common stock
13. Additional paid-in capital
14. Unappropriated retained earnings
15. Total stockholders’ equity
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