PROBLEM 4 The shareholders' equity section of the San Miguel Corporation's balance sheet as of December 31, 2018 is presented below: 12% Preference share capital, P100 par P 270,000 Ordinary share capital, P20 par 1,598,400 Share premium - preference 36,800 Share premium - ordinary 235,200 Share premium - treasury shares 3,200 Accumulated profits 1,585,840 Total shareholders' equity P 3,729,440 San Miguel had 65,000 ordinary shares as of December 31, 2017. The following shareholders' equity transactions were recorded in 2018 and 2019: 2018 May 1 Sold 9,000 ordinary shares for 1'24, par value P20. July 1 Sold 700 preference shares for P124, par value P100. Jul. 31 Issued an 8% share dividend on ordinary shares. The market value of ordinary share was P30 per share. Aug. 30 Declared cash dividends of 12% on preference shares and P3 per share on ordinary shares. Dec. 31 Profit for the year amounted to P1,345,040. 2019 Feb. 1 Sold 2,200 ordinary shares for P30. May 1 Sold 600 preference shares for P128. May 31 Issued a 2-for-1 split of ordinary shares. The par value of the ordinary share was reduced to P10 per share. Sep. 1 Purchased 1,000 ordinary shares for P18 to be held as treasury shares. Oct. 1 Declared cash dividends of 12% on preference shares and P4 per share on ordinary shares. Nov. 1 Sold 1,000 shares of treasury shares for P22. Dec. 31 Profit for the year amounted to P991,520. Required: Determine the amounts, as required, in San Miguel Corporation's comparative financial statements as of and for the years ended December 31, 2018 and 2019:Preferred Stock AYALA issued 50,000 shares of preferred stock at P88 per share on July 1, 2016. Cash Dividends AYALA Corporation has followed a schedule of declaring cash dividends in December and June with payment being made to stockholders of record in the following month. The cash dividends which have been declared since inception of the company through June 30, 2018, are shown below: Declaration Date Ordinary Stock Preferred Stock 12/15/16 P0.60/share P2.00 per share 6/15/17 P0.60/share P2.00 per share 12/15/18 P2.00 per share No cash dividends were declared during June 2018, due to the company's liquidity problems. Retained Earnings As of June 30, 2017, AYALA Corporation's retained earnings account had a balance of P1,380,000. For the fiscal year ending June 30, 2018, AYALA reported net income of P80,000. In March of 2017, AYALA Corporation received a loan from Banco De Oro. The bank requires AYALA to establish a sinking fund and restrict retained earnings for an amount equal to the sinking fund deposit. The annual sinking fund payment of P100,000 is due on April 30 each year, the first payment was made on schedule on April 30, 2018.PROBLEM 5 AYALA Corporation was formed on July 1, 2015. It was authorized to issue 300,000 shares of P20 par value ordinary stock and 100,000 shares of 8 percent P50 par value, cumulative and non-participating preferred stock. AYALA Corporation has a July 1 to June 30 fiscal year. The following information relates to the stockholders' equity accounts of AYALA Corporation: Ordinary Stock Prior to the 2017-2018 fiscal year, AYALA had 110,000 shares of outstanding ordinary stock issued as follows: a. 95,000 shares were issued for cash on July 1, 2015, at P62 per share. b. On July 24, 2015, 5,000 shares were exchanged for a plot of land which cost the seller P140,000 in 2005 and had an estimated market value of P440,000 on July 24, 2015. c. 10,000 shares were issued on March 1, 2016; the shares had been subscribed for P84 per share on October 1, 2015. During the 2017-2018 fiscal year, the following transactions regarding ordinary stock took place: October 1, 2017 Subscription were received for 10,000 shares at P92 per share. Cash of P184,000 was received in full payment of 2,000 shares and stock certificates were issued. The remaining subscription for 8,000 shares were to be paid in full by September 30, 2019, at which time the certificates were to be issued. November 30, 2017 AYALA Corporation purchased 2,000 shares of its own stock on the open market at P78 per share. AYALA uses the cost method for treasury stock. December 15,2017 AYALA declared a 5% stock dividend for stockholders of record on January 15, 2018, to be issued on January 31, 2018. AYALA was having a liquidity problem and could not afford a cash dividend at that time. AYALA ordinary stock was selling at P104 per share on December 15, 2017. June 20, 2018 AYALA sold 500 shares of its own ordinary stock that it had purchased on November 30, 2017, for P42,000