On January 1, 2021, Eugene Co. had retained earnings of P1,240,000. During 2021, the co. earned net income of P456,000. The following transactions occurred: a. Cash dividends of P12 per share on 42,000 shares of ordinary shares were declared and paid. b. A small share dividend was declared and issued. The dividend consisted of 6,620 shares of P25 par ordinary share. On the date of declaration, the market price of the company’s ordinary share was P34 per share. c. The co. recalled and retired 12,100 shares of P50 par preferred share. The call price was P93 per share; the share had originally been issued for P80 per share. d. The Eugene discovered that it had erroneously recorded depreciation expense of P200,000 in 2019 for both financial and tax reporting. The correct depreciation for 2019 had been P275,000. This is considered a material error. Assume tax rate of 25%. The balance of retained earnings on December 31, 2021:
On January 1, 2021, Eugene Co. had
a. Cash dividends of P12 per share on 42,000 shares of ordinary shares were declared and paid.
b. A small share dividend was declared and issued. The dividend consisted of 6,620 shares of P25 par ordinary share. On the date of declaration, the market price of the company’s ordinary share was P34 per share.
c. The co. recalled and retired 12,100 shares of P50 par
d. The Eugene discovered that it had erroneously recorded
The balance of retained earnings on December 31, 2021:
Step by step
Solved in 5 steps
