The following transactions were taken from the records of Marimar Company for you to prepare a statement of changes in equity for the year ended December 31, 2019.
The following transactions were taken from the records of Marimar Company for you to
prepare a statement of changes in equity for the year ended December 31, 2019. After preparing
the statement of changes in equity, provide a paragraph explaining the importance of providing
this information to the varied users of financial statements.
On January 1, 2019, Marimar company had 3,000,000 authorized ordinary shares of P5
par, of which 1,000,000 shares were issued and outstanding on that date. Account balances
appear for the shareholders’ equity items of Marimar company on January 1, 2019:
Ordinary share capital 5,000,000
Share Premium 3,750,000
Retained Earnings 1,625,000
The following transactions transpired during the year:
January 6 Iissued at P54 per share, 50,000 shares of P50 par, 9% cumulative, convertible
Feb. 3 Reacquired 10,000 ordianry shares for P16 per share. Marimar uses the cost method.
April 30 Ccompleted an additional public offering of 250,000 ordinary shares with P5 par value. The shares were sold to the public at P12 per share.
June 20 Declared a cash dividend of P1 per ordinary share, payable on July 10 to shareholders of record on July 1.
Nov. 6 Sold 10,000 shares of treasury for P21 per share.
Dec. 7 Declared yearly cash dividend on preference share, payable on January 7, 2020, to shareholders of record on December 31, 2019.
2020
Jan. 17 Before the books for 2019 were closed, Marimar became aware that the ending inventory on December 31, 2018 was overstated by P100,000. The after tax effect on 2018 net income was P70,000. The appropriate correcting entry was recorded. After correction of the beginning inventory, net income for 2019 was P1,125,000.
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