Problem 2. The stockholders' equity section of the Malampuson Co. showed the following data on December 31, 2020: Ordinary shares, P3 par, 150,000 shares authorized, 125,000 shares issued and outstanding, P375,000; Share premium - excess over par, P3,525,000; Share premium - ordinary share options outstanding, P75,000; Accumulated profit, P240,000. The share options were granted to key executives and provided them the right to acquire 15,000 shares of ordinary shares at P35 per share. The shares were selling at P40 each at the time the options were granted. The following transactions occurred during 2021: Feb. 1 Key executives exercised 2,250 options outstanding at December 31, 2014. The market price per share was P44 at this time. Apr. 1 The company issued bonds of P1,000,000 at 105, giving each P1,000 bond a detachable warrant enabling the holder to purchase two shares of stock at P40 each for a 1-year period. The bonds would sell at P998 per P1,000 bond without the warrant. July 1 The company issued rights to stockholders (one right on each share, exercisable within a 30-day period) permitting holders to acquire one share at P40 with every 10 rights submitted. Shares were selling for P43 at this time. All but 3,000 rights were exercised on July 31, and the additional shares were issued. Oct. 1 All warrants issued in connection with the bonds on April 1 were exercised. Dec. 1 The market price per share dropped to P33 and options came due. Because the market price was below the option price, no remaining options were exercised. Dec. 31 Net income for 2021 was P250,000 Requirements: 1. Prepare the entries of the transactions above. 2. Answer the following questions: 1. The credit to the share premium account related to the issuance of ordinary shares through the exercise of options on 2.01? 2. The amount that should have been allocated to the share warrants outstanding as a result of the issuance of bonds 3. The amount that should be credited to the share premium account as a result of the issuance of shares through the rights exercised by the shareholders 4. The credit to the share premium account from the exercise of the warrants 5. The adjusted balance of the share options outstanding 6. The adjusted balance of the ordinary share warrants outstanding Problem 2. The stockholders' equity section of the Malampuson Co. showed the following data on December 31, 2020: Ordinary shares, P3 par, 150,000 shares authorized, 125,000 shares issued and outstanding, P375,000; Share premium - excess over par, P3,525,000; Share premium - ordinary share options outstanding, P75,000; Accumulated profit, P240,000. The share options were granted to key executives and provided them the right to acquire 15,000 shares of ordinary shares at P35 per share. The shares were selling at P40 each at the time the options were granted. The following transactions occurred during 2021: Feb. 1 Key executives exercised 2,250 options outstanding at December 31, 2014. The market price per share was P44 at this time. Apr. 1 The company issued bonds of P1,000,000 at 105, giving each P1,000 bond a detachable warrant enabling the holder to purchase two shares of stock at P40 each for a 1-year period. The bonds would sell at P998 per P1,000 bond without the warrant. July 1 The company issued rights to stockholders (one right on each share, exercisable within a 30-day period) permitting holders to acquire one share at P40 with every 10 rights submitted. Shares were selling for P43 at this time. All but 3,000 rights were exercised on July 31, and the additional shares were issued. Oct. 1 All warrants issued in connection with the bonds on April 1 were exercised. Dec. 1 The market price per share dropped to P33 and options came due. Because the market price was below the option price, no remaining options were exercised. Dec. 31 Net income for 2021 was P250,000 Requirements: 1. Prepare the entries of the transactions above. 2. Answer the following questions: 1. The credit to the share premium account related to the issuance of ordinary shares through the exercise of options on 2.01? 2. The amount that should have been allocated to the share warrants outstanding as a result of the issuance of bonds 3. The amount that should be credited to the share premium account as a result of the issuance of shares through the rights exercised by the shareholders 4. The credit to the share premium account from the exercise of the warrants 5. The adjusted balance of the share options outstanding 6. The adjusted balance of the ordinary share warrants outstanding