PROBLEM 1: You have been assigned to the audit of NATURE'S MADNESS Company, a manufacturing company. You have been asked to summarize the transactions for the year ended December 31, 2018, affecting shareholders' equity and other related accounts. The shareholders' equity section of NATURE'S MADNESS December 31, 2017, statement of financial position follows: Ordinary share capital, P2 par value, 1,000,000 shares authorized, 180,000 shares issued, 177,580 shares outstanding Share premium - issuance Share premium - treasury shares Retained earnings Cost of treasury shares Total shareholders' equity P 360,000 3,640,000 40,000 651,200 (121,000) P 4,570,200 You have extracted the following information from the accounting records and auditing working papers: 2016 Jan. 15 NATURE'S MADNESS reissued 1,300 treasury shares for P42 per share. The treasury shares on hand at December 31, 2017 were purchased in one block in 2016 Feb. 1 Sold 180, P1,000, 9% bonds due February 1, 2028, at 104 with one detachable share warrant attached to each bond. Interest is payable annually on February 1. The fair market value of the bonds without the share warrants is 95. The detachable warrants have a fair value of P50 each and expire on February 1, 2019. Each warrant entitles the holder to purchase 10 ordinary shares at P40 per share. Mar. 6 2,800 ordinary shares were subscribed for at P44 per share. 40% of the subscription was collected 20 The balance due on 2,800 shares was received and those shares were issued. Nov. 1 There were 120 share warrants detached from the bonds and exercised. NATURE'S MADNESS' net income for 2018 is P956,900 Based on the preceding information, determine the correct December 31, 2018 balance of each of the following:
PROBLEM 1: You have been assigned to the audit of NATURE'S MADNESS Company, a manufacturing company. You have been asked to summarize the transactions for the year ended December 31, 2018, affecting shareholders' equity and other related accounts. The shareholders' equity section of NATURE'S MADNESS December 31, 2017, statement of financial position follows: Ordinary share capital, P2 par value, 1,000,000 shares authorized, 180,000 shares issued, 177,580 shares outstanding Share premium - issuance Share premium - treasury shares Retained earnings Cost of treasury shares Total shareholders' equity P 360,000 3,640,000 40,000 651,200 (121,000) P 4,570,200 You have extracted the following information from the accounting records and auditing working papers: 2016 Jan. 15 NATURE'S MADNESS reissued 1,300 treasury shares for P42 per share. The treasury shares on hand at December 31, 2017 were purchased in one block in 2016 Feb. 1 Sold 180, P1,000, 9% bonds due February 1, 2028, at 104 with one detachable share warrant attached to each bond. Interest is payable annually on February 1. The fair market value of the bonds without the share warrants is 95. The detachable warrants have a fair value of P50 each and expire on February 1, 2019. Each warrant entitles the holder to purchase 10 ordinary shares at P40 per share. Mar. 6 2,800 ordinary shares were subscribed for at P44 per share. 40% of the subscription was collected 20 The balance due on 2,800 shares was received and those shares were issued. Nov. 1 There were 120 share warrants detached from the bonds and exercised. NATURE'S MADNESS' net income for 2018 is P956,900 Based on the preceding information, determine the correct December 31, 2018 balance of each of the following:
Financial Accounting
14th Edition
ISBN:9781305088436
Author:Carl Warren, Jim Reeve, Jonathan Duchac
Publisher:Carl Warren, Jim Reeve, Jonathan Duchac
Chapter13: Corporations: Organization, Stock Transactions, And Dividends
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Problem 3PA: The following selected accounts appear in the ledger of EJ Construction Inc. at the beginning of the...
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Transcribed Image Text:PROBLEM 1: You have been assigned to the audit of NATURE’S MADNESS Company, a manufacturing company. You have
been asked to summarize the transactions for the year ended December 31, 2018, affecting shareholders' equity and other
related accounts. The shareholders' equity section of NATURE’S MADNESS December 31, 2017, statement of financial
position follows:
Ordinary share capital, P2 par value, 1,000,000 shares authorized,
180,000 shares issued, 177,580 shares outstanding
Share premium – issuance
Share premium - treasury shares
Retained earnings
P 360,000
3,640,000
40,000
651,200
Cost of treasury shares
Total shareholders' equity
(121,000)
P4,570,200
You have extracted the following information from the accounting records and auditing working papers:
2016
Jan. 15 NATURE'S MADNESS reissued 1,300 treasury shares for P42 per share. The treasury shares on hand at
December 31, 2017 were purchased in one block in 2016
Sold 180, P1,000, 9% bonds due February 1, 2028, at 104 with one detachable share warrant attached to
each bond. Interest is payable annually on February 1. The fair market value of the bonds without the
share warrants is 95. The detachable warrants have a fair value of P50 each and expire on February 1,
2019. Each warrant entitles the holder to purchase 10 ordinary shares at P40 per share.
2,800 ordinary shares were subscribed for at P44 per share. 40% of the subscription was collected
The balance due on 2,800 shares was received and those shares were issued.
Feb. 1
Mar. 6
20
Nov. 1
There were 120 share warrants detached from the bonds and exercised.
NATURE'S MADNESS' net income for 2018 is P956,900
Based on the preceding information, determine the correct December 31, 2018 balance of each of the following:
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