PROBLEM # 1-4

1. Karen Company post-closing trial balance at December' 31, 2018 was as follows: Karen Corporation Post-Closing Trial Balance December 31, 2018 Debit Credit Accounts payable P 405,000 Accounts receivable P 963,000 Reserve for depreciation 360,000 Reserve for doubtful accounts 54,000 Premium on ordinary shares 1,800.000 Gain on sale of treasury shares 450,000 Bonds payable 720,000 Building and equipment 1,980,000 Cash 396,000 Dividends payable on preference shares 97,200 35 Ordinary share capital (PI par value) 270,000 Inventories 1,116,000 Land 684,000 Financial Asset Through Other Comprehensive Income 513,000 Trading securities at fair value 387,000 Net unrealized loss on trading securities 45,000 Preference share capital (P50 par value) 900,000 Prepaid expenses 72,000 Donated capital 800,000 Share warrants outstanding 208 000 Retained earnings 415,800 Treasury shares - ordinary, at cost 324,000 Php 6,480,000 Php 6,480,000 At December 31, 2018, Karen Company had the following member of ordinary and preference shares: Ordinary Preference Authorized 900,000 90,000 Issued 270,000 18,000 Outstanding 252,000 18,000 The dividends on preference shares are P040 cumulative. In addition, the preference share has a preference in liquidation of P50 per share. Required: Based on the above answer the following a. Share premium / Additional paid-in capital b. Total contributed capital c. Unappropriated retained earnings Total equity 2. The "shareholders' equity" account of Karen Company, after its initial year of operation in 2018 shows the following Date Particulars Debit Credit Issued 6,000 shares at par of P100 in exchange for real Jan 1 property with a market value of P800,000; authorized P 600,000 20,000 shares Jan. 15 Sold 8,000 shares at P120 960,000 Mar. 10 Purchased 800 Karen Company shares at P150 P 120,000 May 15 Loss on sale of machinery 40.000 June 10 Sold 400 treasury shares 68,000 Dec. 31 Cash dividends declared payable January 15, 2019 80,000 Dec. 31 Profit for the year 316,000 Required: Based on the information presented above, answer the following a. The adjusted share capital as of December 31 2018 b. The total share premium as of December 31 2018 c. The unappropriated retained earnings as of December 31 2018 d. The adjusted form equity on December-31, 2018 e. The book value per share of Karen Company on December 31 2018 . Data relating to the shareholders' equity of Karen Company during December 31 are as follows: 8% Preference share, Php 400 par, 12,500 shares - Php 5,000,000 Ordinary share, Php 40 par, 75,000 shares issued - Php 3,000,000 Retained Earnings - Php 7,000,000 Dividends in arrears for 4 years. Required: Based on the above facts, answer the following Assume that the preference shares are cumulative, how much is the book value per share for the preference and ordinary share? 2. Assume that the preference shares are cumulative with a liquidation value of Php 420, how much is the book value per share for the preference and ordinary share? 3. Assume that the preference shares are non-cumulative, how much is the book value per share for the preference and ordinary share? 4. Assume that the preference shares are cumulative and participating, how much is the book value per share for the preference and ordinary share? 4. On January 1 of the current year, Karen Company had 200,000 issued and outstanding ordinary shares. The entity had the following transactions during the year: 36 March 1 - Issued 15,000 ordinary shares April 1- Declared 20% bonus issue July 1 - Reacquired 10,000 ordinary shares to be held in treasury October 1 - Reissued 4,000 treasury shares The weighted average ordinary shares in computing for the earnings per share is how many