Problem 7-4 On January 1, 2019, Martha Company had 6,000,000 authorized ordinary shares of P5 par, of which 2,000,000 shares were issued and outstanding. The shareholders' equity on same date showed the following balances: Ordinary share capital Share premium Retained earnings 10,000,000 7,500,000 3,250,000 On January 5, Martha issued at P54 per share, 100,000 shares of P50 par 9% cumulative, convertible preference share capital. Martha had 250,000 authorized preference shares. On February 1, Martha reacquired 20,000 ordinary shares for P16 per share. Martha uses the cost method. On April 30, Martha had completed an additional public offering of 500,000 ordinary shares with P5 par value. The shares were sold to the public at P12 per share. On June 17, Martha declared a cash dividend of P1 per ordinary share, payable on July 10 to shareholders of record on July 1. On November 6, Martha sold 10,000 shares of treasury for P21 per share. On December 7, Martha declared the yearly cash dividend on preferences share, payable on January 7, 2020, to shareholders of record on December 31,2019. On January 17, 2020, before the books were closed for 2019, Martha became aware that the ending inventory on December 31, 2018 was overstated by P200,000. The after-tax effect on 2018 net income was P140,000. The appropriate correcting entry was recorded. After correction of the beginning inventory, net income for 2019 was P2,250,000. Required: Prepare a statement of changes in equity for the year ended December 31, 2019. Answer.
Problem 7-4 On January 1, 2019, Martha Company had 6,000,000 authorized ordinary shares of P5 par, of which 2,000,000 shares were issued and outstanding. The shareholders' equity on same date showed the following balances: Ordinary share capital Share premium Retained earnings 10,000,000 7,500,000 3,250,000 On January 5, Martha issued at P54 per share, 100,000 shares of P50 par 9% cumulative, convertible preference share capital. Martha had 250,000 authorized preference shares. On February 1, Martha reacquired 20,000 ordinary shares for P16 per share. Martha uses the cost method. On April 30, Martha had completed an additional public offering of 500,000 ordinary shares with P5 par value. The shares were sold to the public at P12 per share. On June 17, Martha declared a cash dividend of P1 per ordinary share, payable on July 10 to shareholders of record on July 1. On November 6, Martha sold 10,000 shares of treasury for P21 per share. On December 7, Martha declared the yearly cash dividend on preferences share, payable on January 7, 2020, to shareholders of record on December 31,2019. On January 17, 2020, before the books were closed for 2019, Martha became aware that the ending inventory on December 31, 2018 was overstated by P200,000. The after-tax effect on 2018 net income was P140,000. The appropriate correcting entry was recorded. After correction of the beginning inventory, net income for 2019 was P2,250,000. Required: Prepare a statement of changes in equity for the year ended December 31, 2019. Answer.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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A debenture is a private and long-term debt instrument issued by financial, non-financial institutions, governments, or corporations. A debenture is classified as a type of bond, where the instrument carries a fixed rate of interest, commonly known as the ‘coupon rate.’ Debentures are documented in an indenture, clearly specifying the type of debenture, the rate and method of interest computation, and maturity date.
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It is the process to determine the value or worth of an asset, liability, debt of the company. It can be determined by many processes or techniques. Many factors can impact the valuation of an asset, liability, or the company, like:
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Transcribed Image Text:Problem 7-4
On January 1, 2019, Martha Company had 6,000,000 authorized ordinary shares of P5
par, of which 2,000,000 shares were issued and outstanding. The shareholders' equity
on same date showed the following balances:
Ordinary share capital
Share premium
Retained earnings
10,000,000
7,500,000
3,250,000
On January 5, Martha issued at P54 per share, 100,000 shares of P50 par 9%
cumulative, convertible preference share capital. Martha had 250,000 authorized
preference shares.
On February 1, Martha reacquired 20,000 ordinary shares for P16 per share. Martha
uses the cost method.
On April 30, Martha had completed an additional public offering of 500,000 ordinary
shares with P5 par value. The shares were sold to the public at P12 per share.
On June 17, Martha declared a cash dividend of P1 per ordinary share, payable on July
10 to shareholders of record on July 1. On November 6, Martha sold 10,000 shares of
treasury for P21 per share.
On December 7, Martha declared the yearly cash dividend on preferences share,
payable on January 7, 2020, to shareholders of record on December 31,2019.
On January 17, 2020, before the books were closed for 2019, Martha became aware
that the ending inventory on December 31, 2018 was overstated by P200,000.
The after-tax effect on 2018 net income was P140,000. The appropriate correcting entry
was recorded.
After correction of the beginning inventory, net income for 2019 was P2,250,000.
Required:
Prepare a statement of changes in equity for the year ended December 31, 2019.
Answor.
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