show proper solution PROBLEM NO. 7The following independent situations relate to the audit of shareholders' equity. Answer thequestions at the end of each situation.BRANDY CO. was organized at the beginning of the current year. The following shareholders'equity accounts are included in the entity's year-end trial balance.Preference share capital, P100 par, authorized 100,000 shares,issued and outstanding, 66,000 sharesPreference share capital subscribed, 6,000 sharesShare premium - preferenceSubscriptions receivable - preferenceOrdinary share capital, P10 par value, authorized 200,000 shares,issued and outstanding, 72,000 sharesOrdinary share capital subscribed, 72,000 sharesShare premium - ordinarySubscriptions receivable - ordinaryThe following current year transactions relate to Brandy Co.'s shareholders' equity:• Immediately after Brandy Co. was organized, it received subscriptions to 60,000 preferenceshares. Subscriptions to ordinary shares were also received on the same date.• During the year, subscriptions were received for an additional 12,000 preference shares at aprice of P120 per share.• Cash payments were received from subscribers at frequent intervals for several monthsafter subscription. The company's policy is to issue share certificates only upon fullpayment of the share subscription.• Also during the current year, Brandy Co. issued 24,000 ordinary shares in exchange for atract of land with a fair value of P690,000.37. How much was collected from the subscribers of preference shares?A. P1,440,000B. P5,640,000C. P7,440,000P6,600,000600,000240,000360,00036. What is the total subscription price of the ordinary shares originally subscribed?A. P4,290,000B. P3,840,000C. P3,600,000D. P4,050,000720,000720,0002,850,0001,080,000A.ن ن ن نےD. P7,080,00038. The company's statement of financial position at the end of the current year should reportcontributed capital ofB.C.D.PreferenceP7,440,0007,080,0006,480,0006,840,000OrdinaryP4,290,0003,210,0002,490,000360,000 Page 9The following shareholders' equity accounts are included in the statement of financial positionof CONDESSA CO. on December 31, 2016.Preference share capital, 8%, P100 par (200,000 shares authorized,60,000 shares issued and outstanding)Ordinary share capital, P5 par (2,000,000 shares authorized,600,000 shares issued and outstanding)Share premiumRetained earningsTotalP6,000,0003,000,0003,750,0003,500,000P16,250,000During 2017, Condessa took part in the following transactions concerning equity.1. Paid the annual 2016 P8 per share dividend on preference shares and a P2 per sharedividend on ordinary shares. These dividends had been declared on December 31, 2016.2. Purchased 81,000 shares of its own outstanding ordinary shares for P40 per share.3. Reissued 21,000 treasury shares for land valued at P900,000.4. Issued 15,000 preference shares at P105 per share.5. Declared a 10% stock dividend on the outstanding ordinary shares when the shares areselling for P45 per share.6. Issued the stock dividend.7.Declared the annual 2017 P8 per share dividend on preference shares and the P2 pershare dividend on ordinary shares. These dividends are payable in 2018.8. Reported net income of P9,900,000 for the current year.39. What is the retained earnings balance (before appropriation for treasury shares) onDecember 31, 2017?A. P9,182,000B. P718,000C. P6,782,000D. P11,000,00040. What amount should be reported as total shareholders' equity on December 31, 2017?B. P23,597,000A. P25,997,000C. P21,197,000D. P14,415,000

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PROBLEM NO. 7 The following independent situations relate to the audit of shareholders' equity. Answer the questions at the end of each situation. BRANDY CO. was organized at the beginning of the current year. The following shareholders' equity accounts are included in the entity's year-end trial balance. Preference share capital, P100 par, authorized 100,000 shares, issued and outstanding, 66,000 shares Preference share capital subscribed, 6,000 shares Share premium - preference Subscriptions receivable - preference Ordinary share capital, P10 par value, authorized 200,000 shares, issued and outstanding, 72,000 shares Ordinary share capital subscribed, 72,000 shares Share premium-ordinary Subscriptions receivable - ordinary The following current year transactions relate to Brandy Co.'s shareholders' equity: • Immediately after Brandy Co. was organized, it received subscriptions to 60,000 preference shares. Subscriptions to ordinary shares were also received on the same date. • During the year, subscriptions were received for an additional 12,000 preference shares at a price of P120 per share. P6,600,000 600,000 240,000 360,000 Cash payments were received from subscribers at frequent intervals for several months after subscription. The company's policy is to issue share certificates only upon full payment of the share subscription. 37. How much was collected from the subscribers of preference shares? A. P1,440,000 B. P5,640,000 C. P7,440,000 720,000 720,000 • Also during the current year, Brandy Co. issued 24,000 ordinary shares in exchange for a tract of land with a fair value of P690,000. 2,850,000 1,080,000 36. What is the total subscription price of the ordinary shares originally subscribed? A. P4,290,000 B. P3,840,000 C. P3,600,000 D. P4,050,000 B. C. D. Preference P7,440,000 7,080,000 D. P7,080,000 38. The company's statement of financial position at the end of the current year should report contributed capital of 6,480,000 6,840,000 Ordinary P4,290,000 3,210,000 2,490,000 360,000