Problem 3: Carr Company reported the following shareholders' equity on January 1, 2021: Preference share capital Share premium - preference Ordinary share capital Share premium - ordinary Retained earnings Treasury shares - ordinary 1,800,000 90,000 5,150,000 3,500,000 4,000,000 270,000 On January 1, 2021, Carr Company had 100,000 authorized shares of P100 par, 10% cumulative preference share capital and 3,000,000 authorized shares of no-par ordinary share capital with a stated value of P5 per share. On January 10, 2021, Carr formally retired all the 30,000 ordinary shares of treasury. The treasury shares had been acquired in the previous year and were originally issued at P10 per share. Carr owned 10,000 ordinary shares of Bush Company purchased several years ago for P600,000. On February 15, Carr declared and paid a dividend in kind of one share of Bush for every hundred ordinary shares of Carr held by a shareholder of record on February 28, 2021. The market price of Bush share was P75 on February 15, 2021. On December 12, 2021, Carr declared the yearly cash dividend on preference share, payable on January 14, 2022, to shareholders of record on December 31, 2021. On January 15, 2022, before the accounting records were closed for 2021, Carr became aware that rent income for the year ended December 31, 2020 was overstated by P500,000. The after-tax effect on 202 net income was P350,000. The appropriate correcting entry was recorded. After correcting rent income, net income for 2021 was P2,600,000. Required: Prepare a Statement of Changes in Equity for 2021. (Provide for money columns for the following: Ordinary Shares, Preference Shares, Share Premium, Retained Earnings, and Treasury Shares)
Problem 3: Carr Company reported the following shareholders' equity on January 1, 2021: Preference share capital Share premium - preference Ordinary share capital Share premium - ordinary Retained earnings Treasury shares - ordinary 1,800,000 90,000 5,150,000 3,500,000 4,000,000 270,000 On January 1, 2021, Carr Company had 100,000 authorized shares of P100 par, 10% cumulative preference share capital and 3,000,000 authorized shares of no-par ordinary share capital with a stated value of P5 per share. On January 10, 2021, Carr formally retired all the 30,000 ordinary shares of treasury. The treasury shares had been acquired in the previous year and were originally issued at P10 per share. Carr owned 10,000 ordinary shares of Bush Company purchased several years ago for P600,000. On February 15, Carr declared and paid a dividend in kind of one share of Bush for every hundred ordinary shares of Carr held by a shareholder of record on February 28, 2021. The market price of Bush share was P75 on February 15, 2021. On December 12, 2021, Carr declared the yearly cash dividend on preference share, payable on January 14, 2022, to shareholders of record on December 31, 2021. On January 15, 2022, before the accounting records were closed for 2021, Carr became aware that rent income for the year ended December 31, 2020 was overstated by P500,000. The after-tax effect on 202 net income was P350,000. The appropriate correcting entry was recorded. After correcting rent income, net income for 2021 was P2,600,000. Required: Prepare a Statement of Changes in Equity for 2021. (Provide for money columns for the following: Ordinary Shares, Preference Shares, Share Premium, Retained Earnings, and Treasury Shares)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Problem 3: Carr Company reported the following shareholders' equity on January 1, 2021:
Preference share capital
Share premium – preference
Ordinary share capital
Share premium – ordinary
Retained earnings
Treasury shares – ordinary
1,800,000
90,000
5,150,000
3,500,000
4,000,000
270,000
On January 1, 2021, Carr Company had 100,000 authorized shares of P100 par, 10% cumulative preference share capital
and 3,000,000 authorized shares of no-par ordinary share capital with a stated value of P5 per share.
On January 10, 2021, Carr formally retired all the 30,000 ordinary shares of treasury. The treasury shares had been
acquired in the previous year and were originally issued at P10 per share.
Carr owned 10,000 ordinary shares of Bush Company purchased several years ago for P600,000.
On February 15, Carr declared and paid a dividend in kind of one share of Bush for every hundred ordinary shares of Carr
held by a shareholder of record on February 28, 2021. The market price of Bush share was P75 on February 15, 2021.
On December 12, 2021, Carr declared the yearly cash dividend on preference share, payable on January 14, 2022, to
shareholders of record on December 31, 2021.
On January 15, 2022, before the accounting records were closed for 2021, Carr became aware that rent income for the
year ended December 31, 2020 was overstated by P500,000.
The after-tax effect on 202 net income was P350,000. The appropriate correcting entry was recorded.
After correcting rent income, net income for 2021 was P2,600,000.
Required: Prepare a Statement of Changes in Equity for 2021. (Provide for money columns for the following: Ordinary
Shares, Preference Shares, Share Premium, Retained Earnings, and Treasury Shares)
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