Problem No.1. Trading Securities At December 31, 2017, BAGCPARS Company properly reported the following Trading equity securities: EDA Corporation, 1000 shares, Preference shares DJOA, Inc. 6,000 shares of ordinary shares RVFE Co., 2000 shares Total P40,000 60,000 55,000 P155,000 Cost Market Value P30,000| 90,000 80,000 P200,000 During 2018, the following transactions occurred among others: January 5 Acquired 8,000 shares of ARP Co. for P880,000 incurring additional P10,000 for brokerage and another P10,000 for commission. These shares are to be initially recognized as trading securities Received dividends from ARP Co. declared January 10, 2018 P16,000 Received dividends of P2 per share from DJOA Inc. Sold 2,500 shares of DJOA, Inc. for P50,000. Commission and taxes for P5,000 were paid for the sale February 14 March 18 November 15 December 15 Recorded a transfer of all remaining DJOA's shares to FVTOCI when the fair value was P14. On December 31, 2018 the following are the available market values per share: EDA Corporation-preference shares DJOA, Inc. ordinary share RVFE P50 15 45 ARP Co. 100 Questions: Based on the above and the result of your audit, determine the following: 1. The correct cost of investment acquired on January 5: a. 880,000 2. The total dividend income during the year. а. 28,000 3. The gain or loss on sale of DJOA, Inc. a. 20,000 gain | b. 900,000 c. 864,000 d. 884,000 b. 16,000 с. 12,000 d. 40,000 | b. 20,000 loss c. 7,500 gain d. 7,500 loss
Problem No.1. Trading Securities At December 31, 2017, BAGCPARS Company properly reported the following Trading equity securities: EDA Corporation, 1000 shares, Preference shares DJOA, Inc. 6,000 shares of ordinary shares RVFE Co., 2000 shares Total P40,000 60,000 55,000 P155,000 Cost Market Value P30,000| 90,000 80,000 P200,000 During 2018, the following transactions occurred among others: January 5 Acquired 8,000 shares of ARP Co. for P880,000 incurring additional P10,000 for brokerage and another P10,000 for commission. These shares are to be initially recognized as trading securities Received dividends from ARP Co. declared January 10, 2018 P16,000 Received dividends of P2 per share from DJOA Inc. Sold 2,500 shares of DJOA, Inc. for P50,000. Commission and taxes for P5,000 were paid for the sale February 14 March 18 November 15 December 15 Recorded a transfer of all remaining DJOA's shares to FVTOCI when the fair value was P14. On December 31, 2018 the following are the available market values per share: EDA Corporation-preference shares DJOA, Inc. ordinary share RVFE P50 15 45 ARP Co. 100 Questions: Based on the above and the result of your audit, determine the following: 1. The correct cost of investment acquired on January 5: a. 880,000 2. The total dividend income during the year. а. 28,000 3. The gain or loss on sale of DJOA, Inc. a. 20,000 gain | b. 900,000 c. 864,000 d. 884,000 b. 16,000 с. 12,000 d. 40,000 | b. 20,000 loss c. 7,500 gain d. 7,500 loss
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Problem No.1. Irading Securities
At December 31, 2017, BAGCPARS Company properly reported the following Trading equity securities:
EDA Corporation, 1000 shares, Preference shares
DJOA, Inc. 6,000 shares of ordinary shares
RVFE Co., 2000 shares
Total
Cost Market Value
P40,000
60,000
55,000
P155,000
P30,000
90,000
80,000
P200,000
During 2018, the following transactions occurred among others:
January 5
Acquired 8,000 shares of ARP Co. for P880,000 incurring additional P10,000 for
brokerage and another P10,000 for commission. These shares are to be initially
recognized as trading securities
Received dividends from ARP Co. declared January 10, 2018 P16,000
Received dividends of P2 per share from DJOA Inc.
February 14
March 18
November 15
Sold 2,500 shares of DJOA, Inc. for P50,000. Commission and taxes for P5,000 were
paid for the sale
Recorded a transfer of all remaining DJOA's shares to FVTOCI when the fair value
was P14.
December 15
On December 31, 2018 the following are the available market values per share:
EDA Corporation-preference shares
P50
DJOA, Inc. ordinary share
15
RVFE
45
ARP Co.
100
Questions:
Based on the above and the result of your audit, determine the following:
1. The correct cost of investment acquired on January 5:
a. 880,000
2. The total dividend income during the year.
a. 28,000
b. 900,000
c. 864,000
d. 884,000
b. 16,000
C. 12,000
d. 40,000
3. The gain or loss on sale of DJOA, Inc.
a. 20,000 gain
b. 20,000 loss
c. 7,500 gain
d. 7,500 loss
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