PROBLEM 1: You were assigned to audit the shareholders' equity of Glory Inc. for the year ended December31, 2019. Glory Corp. was incorporated in early 2018 when it was authorized by SEC to isu 500,000 ordinary shares (P10 par) and 100,000 convertible preference shares (P20 par). The followiny schedule reflects the company's capital balances as of December 31, 2018: Ordinary shares, 100,000 shares issued during the company's incorporation in exchange of a land with a fair value of P1.4 M. Preference shares, 50,000 shares issued during the company's incorporation at P50 per share. Each preference share is convertible to four ordinary shares Retained earnings, which is the company's net income in 2018 Total shareholders' equity P1,400,000 2,500,000 540,000 P3.440.000 Your inquiries and investigation revealed the following transactions, which occurred in 2019: a. On January 15, the company reacquired 20, 000 ordinary shares (from the 2018 issue) at P22 share and reverted them to treasury since it intends to reissue the same. b. On February 11, the company reissued 4,000 treasury shares at P28 per share. 46000

PROBLEM 1: You were assigned to audit the shareholders' equity of Glory Inc. for the year ended December31, 2019. Glory Corp. was incorporated in early 2018 when it was authorized by SEC to isu 500,000 ordinary shares (P10 par) and 100,000 convertible preference shares (P20 par). The followiny schedule reflects the company's capital balances as of December 31, 2018: Ordinary shares, 100,000 shares issued during the company's incorporation in exchange of a land with a fair value of P1.4 M. Preference shares, 50,000 shares issued during the company's incorporation at P50 per share. Each preference share is convertible to four ordinary shares Retained earnings, which is the company's net income in 2018 Total shareholders' equity P1,400,000 2,500,000 540,000 P3.440.000 Your inquiries and investigation revealed the following transactions, which occurred in 2019: a. On January 15, the company reacquired 20, 000 ordinary shares (from the 2018 issue) at P22 share and reverted them to treasury since it intends to reissue the same. b. On February 11, the company reissued 4,000 treasury shares at P28 per share. 46000

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter16: Retained Earnings And Earnings Per Share

Section: Chapter Questions

Problem 25P: The controller of Red Lake Corporation has requested assistance in determining income, basic...

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Concept explainers

The Effect Of Prepaid Taxes On Assets And Liabilities

Many businesses estimate tax liability and make payments throughout the year (often quarterly). When a company overestimates its tax liability, this results in the business paying a prepaid tax. Prepaid taxes will be reversed within one year but can result in prepaid assets and liabilities.

Final Accounts

Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded.

Ledger Posting

A ledger is an account that provides information on all the transactions that have taken place during a particular period. It is also known as General Ledger. For example, your bank account statement is a general ledger that gives information about the amount paid/debited or received/ credited from your bank account over some time.

Trial Balance and Final Accounts

In accounting we start with recording transaction with journal entries then we make separate ledger account for each type of transaction. It is very necessary to check and verify that the transaction transferred to ledgers from the journal are accurately recorded or not. Trial balance helps in this. Trial balance helps to check the accuracy of posting the ledger accounts. It helps the accountant to assist in preparing final accounts. It also helps the accountant to check whether all the debits and credits of items are recorded and posted accurately. Like in a balance sheet debit and credit side should be equal, similarly in trial balance debit balance and credit balance should tally.

Adjustment Entries

At the end of every accounting period Adjustment Entries are made in order to adjust the accounts precisely replicate the expenses and revenue of the current period. It is also known as end of period adjustment. It can also be referred as financial reporting that corrects the errors made previously in the accounting period. The basic characteristics of every adjustment entry is that it affects at least one real account and one nominal account.

Question

SHOW THE JOURNAL ENTRY OF C AND D!

PROBLEM 1: You were assigned to audit the shareholders' equity of Glory Inc. for the year ended
December31, 2019. Glory Corp. was incorporated in early 2018 when it was authorized by SEC to issue
500,000 ordinary shares (P10 par) and 100,000 convertible preference shares (P20 par). The following
schedule reflects the company's capital balances as of December 31, 2018:
Ordinary shares, 100,000 shares issued during the company's
incorporation in exchange of a land with a fair value of P1.4 M.
Preference shares, 50,000 shares issued during the company's
incorporation at PS0 per share. Each preference share is convertible
to four ordinary shares
Retained earnings, which is the company's net income in 2018
Total shareholders' equity
P1,400,000
2,500,000
540,000
P 3,440.000.
Your inquiries and investigation revealed the following transactions, which occurred in 2019:
a. On January 15, the company reacquired 20, 000 ordinary shares (from the 2018 issue) at P22 per
share and reverted them to treasury since it intends to reissue the same.
b. On February 11, the company reissued 4,000 treasury shares at P28 per share.
c. On March 5, the company reissued 6,000 treasury shares at P19 per share.
d. On April 1, the company retired 5,000 treasury shares.
e. On May 12, 20,000 preference shares were converted to ordinary shares.
f. On June 9, 15,000 shares were subscribed for a total amount of P175,000
8. On July 4, a 2 for 1 share split was affected for the ordinary share.
h. On August 8, the company reissued 3,000 treasury shares at P8 per share.
. The company issued 4,000 ordinary shares for P11 per share.
j. The company registered an adjustments net income in 2019 at P830,000.

Definition Definition Method of recording financial transactions in the book of original entry by debiting and crediting the accounts affected by a transaction using the golden rules of accrual accounting.

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