The following information pertains to Enzo Company: - Dividends on its 50,000 shares of 10%, P100 par value cumulative preference shares have not been declared or paid for 5 years. - Treasury shares was acquired at a cost of P1,000,000 during the year. Half of the treasury shares were issued for P600,000. - The board of directors appropriated P3,000,000 of the company’s retained earnings for plant expansion. - Enzo restricted P4,000,000 of its cash as a bond sinking fund for future retirement of bonds. Contractual provisions also required Enzo to appropriate the same amount of retained earnings. What amount of retained earnings should be appropriated as a result of these items?

The following information pertains to Enzo Company: - Dividends on its 50,000 shares of 10%, P100 par value cumulative preference shares have not been declared or paid for 5 years. - Treasury shares was acquired at a cost of P1,000,000 during the year. Half of the treasury shares were issued for P600,000. - The board of directors appropriated P3,000,000 of the company’s retained earnings for plant expansion. - Enzo restricted P4,000,000 of its cash as a bond sinking fund for future retirement of bonds. Contractual provisions also required Enzo to appropriate the same amount of retained earnings. What amount of retained earnings should be appropriated as a result of these items?

SWFT Comprehensive Vol 2020

43rd Edition

ISBN:9780357391723

Author:Maloney

Publisher:Maloney

Chapter19: Corporations: Distributions Not In Complete Liquidation

Section: Chapter Questions

Problem 1BCRQ

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Please show all necessary computations so I can understand better. Thank you! What amount of retained earnings should be appropriated as a result of the given transactions?
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What amount of retained earnings should be appropriated as a result of the given transactions?
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