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Required: Journal Entry From January to December Transactions and take note of the following below:

Required: Journal Entry From January to December Transactions and take note of the following below:

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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pls help and if needed, provide supporting computations
PROBLEM: RETAINED EARNINGS Hiraya Corporation has the following shareholders' equity account balances at December 31, 2019: Ordinary Shares (P100 par value, 200,000 shares authorized, 104,000 shares issued) 10,400,000 Share Premium - Ordinary 500,000 Retained Earnings Appropriated for Ordinary Treasury Shares 420,000 Retained Earnings 8,000,000 Treasury Ordinary Shares, 4,000 shares 420,000 Transactions in 2020 are as follows: Jan 15 Reissued 1,500 treasury shares at P120 per share. Mar 1 Split the ordinary shares 2-for-1 per share. Apr 1 Decided to give the shareholders a choice between: a. receiving a cash dividend of P1,000,000 b. a property dividend in the form of equipment with a cost of P3,000,000 and an accumulated depreciation of P1,600,000. The dividends are payable to shareholders of record on July 1, 2020 and payable on August 15, 2020. The entity estimated that 70% of the shareholders will take the option of the cash dividends and 30% will opt to receive the non- cash asset. The equipment had the following fair value less cost to distribute: April 1, 2020 - P1,500,000 August 15, 2020 - P1,200,000 Aug 15 The shareholders decided to receive the property dividend. Issued 20,000 12% Redeemable Preference Shares with a P100 par value. The preference shares have a mandatory redemption date of September 1, 2025 at P110 per share. The 12% dividends are payable every September 1 starting September 1, 2021. This issuance requires the company to restrict Retained Earnings amounting to P1,000,000 at the end of the year starting Sep 1 December 31, 2020. To make the issuance of the Redeemable Preference Shares more attractive, the company issued the shares with 20,000 detachable warrants. The entire package sells for P150. The warrants enable the holder to purchase 10,000 shares at P70 per share. Immediately after the issuance of the shares, the warrants are selling at P12 per share and the market value of the preference shares without the warrants is P108.
Transcribed Image Text:PROBLEM: RETAINED EARNINGS Hiraya Corporation has the following shareholders' equity account balances at December 31, 2019: Ordinary Shares (P100 par value, 200,000 shares authorized, 104,000 shares issued) 10,400,000 Share Premium - Ordinary 500,000 Retained Earnings Appropriated for Ordinary Treasury Shares 420,000 Retained Earnings 8,000,000 Treasury Ordinary Shares, 4,000 shares 420,000 Transactions in 2020 are as follows: Jan 15 Reissued 1,500 treasury shares at P120 per share. Mar 1 Split the ordinary shares 2-for-1 per share. Apr 1 Decided to give the shareholders a choice between: a. receiving a cash dividend of P1,000,000 b. a property dividend in the form of equipment with a cost of P3,000,000 and an accumulated depreciation of P1,600,000. The dividends are payable to shareholders of record on July 1, 2020 and payable on August 15, 2020. The entity estimated that 70% of the shareholders will take the option of the cash dividends and 30% will opt to receive the non- cash asset. The equipment had the following fair value less cost to distribute: April 1, 2020 - P1,500,000 August 15, 2020 - P1,200,000 Aug 15 The shareholders decided to receive the property dividend. Issued 20,000 12% Redeemable Preference Shares with a P100 par value. The preference shares have a mandatory redemption date of September 1, 2025 at P110 per share. The 12% dividends are payable every September 1 starting September 1, 2021. This issuance requires the company to restrict Retained Earnings amounting to P1,000,000 at the end of the year starting Sep 1 December 31, 2020. To make the issuance of the Redeemable Preference Shares more attractive, the company issued the shares with 20,000 detachable warrants. The entire package sells for P150. The warrants enable the holder to purchase 10,000 shares at P70 per share. Immediately after the issuance of the shares, the warrants are selling at P12 per share and the market value of the preference shares without the warrants is P108.
The equipment had the following fair value less cost to distribute: April 1, 2020 - P1,500,000 August 15, 2020 - P1,200,000 Aug 15 The shareholders decided to receive the property dividend. Issued 20,000 12% Redeemable Preference Shares with a P100 par value. The preference shares have a mandatory redemption date of September 1, 2025 at P110 per share. The 12% dividends are payable every September 1 starting September 1, 2021. This issuance requires the company to restrict Retained Earnings amounting to P1,000,000 at the end of the year starting December 31, 2020. Sep 1 To make the issuance of the Redeemable Preference Shares more attractive, the company issued the shares with 20,000 detachable warrants. The entire package sells for P150. The warrants enable the holder to purchase 10,000 shares at P70 per share. Immediately after the issuance of the shares, the warrants are selling at P12 per share and the market value of the preference shares without the warrants is P108. 80% of the warrants are exercised while the remaining 20% expired. Oct 1 5,000 shares were retired at P60 per share. These shares were originally issued in 2018 (prior to the share split) at P112 per Nov 2 share. Nov 20 Reissue 1,500 Treasury Ordinary Shares at P31.50. Dec 15 Declared a P5 per share cash dividends on ordinary shares. Dec 31 Discovered the following errors in the previous years: 2017 Depreciation is overstated by P20,000. 2018 Depreciation is understated by P30,000. 2019 Ending Inventory is overstated by P50,000. 2019 Accrued Salaries is understated by P80,000. Net Income before considering the errors discovered and the dividends and amortization of premium on Redeemable Preference Shares is P2,200,000. Required: Journal Entry From January to December Transactions and take note of the following below: The Journal Entry to correct the 2017 Understatement of Depreciation The Journal Entry to correct the 2018 Understatement of Depreciation The Journal Entry to correct the overstatement of the 2019 Ending Inventory The Journal Entry to correct the 2019 understatement of Accrued Salaries The Journal Entry to record the dividend declaration on the Redeemable Preference Shares The Journal Entry to record the amortization of Share Premium on Redeemable Preference Shares The Journal Entry to close the amount of adjusted Net Income or Loss to Retained Earnings The Journal Entry to record the Appropriation of Retained Earnings for the redemption of preference
Transcribed Image Text:The equipment had the following fair value less cost to distribute: April 1, 2020 - P1,500,000 August 15, 2020 - P1,200,000 Aug 15 The shareholders decided to receive the property dividend. Issued 20,000 12% Redeemable Preference Shares with a P100 par value. The preference shares have a mandatory redemption date of September 1, 2025 at P110 per share. The 12% dividends are payable every September 1 starting September 1, 2021. This issuance requires the company to restrict Retained Earnings amounting to P1,000,000 at the end of the year starting December 31, 2020. Sep 1 To make the issuance of the Redeemable Preference Shares more attractive, the company issued the shares with 20,000 detachable warrants. The entire package sells for P150. The warrants enable the holder to purchase 10,000 shares at P70 per share. Immediately after the issuance of the shares, the warrants are selling at P12 per share and the market value of the preference shares without the warrants is P108. 80% of the warrants are exercised while the remaining 20% expired. Oct 1 5,000 shares were retired at P60 per share. These shares were originally issued in 2018 (prior to the share split) at P112 per Nov 2 share. Nov 20 Reissue 1,500 Treasury Ordinary Shares at P31.50. Dec 15 Declared a P5 per share cash dividends on ordinary shares. Dec 31 Discovered the following errors in the previous years: 2017 Depreciation is overstated by P20,000. 2018 Depreciation is understated by P30,000. 2019 Ending Inventory is overstated by P50,000. 2019 Accrued Salaries is understated by P80,000. Net Income before considering the errors discovered and the dividends and amortization of premium on Redeemable Preference Shares is P2,200,000. Required: Journal Entry From January to December Transactions and take note of the following below: The Journal Entry to correct the 2017 Understatement of Depreciation The Journal Entry to correct the 2018 Understatement of Depreciation The Journal Entry to correct the overstatement of the 2019 Ending Inventory The Journal Entry to correct the 2019 understatement of Accrued Salaries The Journal Entry to record the dividend declaration on the Redeemable Preference Shares The Journal Entry to record the amortization of Share Premium on Redeemable Preference Shares The Journal Entry to close the amount of adjusted Net Income or Loss to Retained Earnings The Journal Entry to record the Appropriation of Retained Earnings for the redemption of preference
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