CHAPTER 10

Share Capital Transactions Subsequent to Original Issuance

E 10-1
1.a
Ordinary Share Capital (2,000 sh x P20)
Ordinary Share Premium (2,000 sh x P5)
Paid-In Capital from Retirement of OSC
Cash (2,000 sh x P15)
b

2.

40,000
10,000
20,000
30,000

Ordinary Share Capital

Ordinary Share Premium
Retained Earnings
Cash (2,000 sh x P30)

40,000
10,000
10,000
60,000

200,000 2,000 = 198,000 shares issued and outstanding

E 10 -2
1. Treasury Shares (5,000 sh x P20)
Cash

100,000
100,000

Retained Earnings
Retained Earnings Appropriated for Treasury Shares

100,000
100,000

Cash (3,500 sh x P28)

Treasury Shares (3,500 x P20)
Paid-In Capital from Sale of Treasury Shares

98,000

Retained Earnings Appropriated for Treasury Shares

Retained Earnings

70,000

70,000
28,000
70,000

SHAREHOLDERS EQUITY
2. Contributed Capital:
Ordinary Share Capital, P25 par, 100,000 shares issued,
98,500 shares outstanding, 1,500 shares in the treasury
Ordinary Share Premium
Paid-in Capital from Sale of Treasury Shares
Retained Earnings:
Retained Earnings Appropriated for Treasury Shares
Unappropriated Retained Earnings
Total Contributed Capital and Retained Earnings
Less Treasury Shares, at cost - 1,500 shares
Total Shareholders Equity

P2,500,000
1,000,000
28,000
P 30,000
1,470,000

E 10-3
1. Alternative 1
a. Received 5,000 Ordinary Shares as donation from a major shareholder
b.

Cash

250,000

P3,528,000
1,500,000
P5,028,000
30,000
P4,998,000

APC Chapter 10 (2007 edition)

page 2

Donated Capital

250,000

Alternative 2
a. Treasury Shares
Donated Capital

200,000

b.

250,000

200,000

Cash
Treasury Share
PIC from Sale of Treasury Shares

2.
Issued
Outstanding

200,000
50,000
after the
donation
150,000 shs
145,000 shs

E 10-4
1.a
Preference Share Capital (2,000 sh x P50)
Preference Share Premium
PIC from Conversion of PSC into OSC
Ordinary Share Capital (2,000 sh x 4 x P10)
b

2.a
b
c

100,000
50,000
70,000
80,000

Preference Share Capital (2,000 sh x P50)

Preference Share Premium
Retained Earnings
Ordinary Share Capital (2,000 sh x 10 x P10)

100,000
50,000
50,000

Preference Share Capital (2,000 sh x P50)

Preference Share Premium
Retained Earnings
Ordinary Share Capital (2,000 sh x 8 x P10)

100,000
50,000
10,000

Issued and outstanding PS 38,000

PS 38,000
PS 38,000

200,000

160,000

OS 108,000
OS 120,000
OS 116,000

E 10-5
1.a
Ordinary Share Capital, P25 par
Ordinary Share Capital, P5 par
b

after the sale

of the don shs
150,000shs
150,000shs

Ordinary Share Capital, P25 par

Ordinary Share Capital, P100 par

500,000
500,000
500,000
500,000

Ordinary Share Capital, P25 par

Ordinary Share Premium
Ordinary Share Capital, P15 par (20,000 sh x P15)
Paid-In Capital from Reduction in Par Value of OSC

500,000
100,000

Ordinary Share Capital, P25 par

Ordinary Share Premium
Ordinary Share Capital, P25 stated value
PIC from Exchange of Par for No-Par Share Capital

500,000
100,000

300,000
300,000

500,000
100,000

APC Chapter 10 (2007 edition)

2
b

page 3

A.20,000 x 5 = 100,000 shs

C. 20,000shs
20,000/4 = 5,000 shs
d. 20,000 shs

E 10-6
1.a Treasury Shares
Cash

50,000
50,000

Retained Earnings
Retained Earnings Appropriated for Treasury Shares

50,000

Cash (4,000 x P12)

PIC from Sale of Treasury Shares
Treasury Shares (4,000 x P10)

48,000

Retained Earnings Appropriated for treasury Shares

Retained Earnings

40,000

Cash (1,000x P7)

PIC from Sale of Treasury Shares
Treasury Shares (1,000 x P10)
Retained Earnings Appropriated for Treasury Shares
Retained Earnings
b.

2.

Preference Share Capital (1,000x P100)

Preference Share Premium
PIC from Conversion of PSC into OSC
Ordinary Share Capital (1,000 x 10 x P5)
Issued and Outstanding

8,000
40,000
40,000
7,000
3,000
10,000
10,000
10,000
100,000
20,000
70,000
50,000

PS 9,000 shs OS 510,000 shs

P 10 -1
1.a PSC Subscription Receivable (10,000 sh x P125)
OSC Subscription Receivable (20,000 sh x P60)
PSC Subscribed (10,000 sh x P100)
OSC Subscribed (20,000 sh x P50)
Preference Share Premium
Ordinary Share Premium

b.

50,000

1,250,000
1,200,000
1,000,000
1,000,000
250,000
200,000

Cash
PSC Subscription Receivable (P1,250,000 x 50%)
OSC Subscription Receivable (1,200,000 x 50%)

1,225,000

Cash
PSC Subscription Receivable
OSC Subscription Receivable

1,225,000

PSC Subscribed
OSC Subscribed
Preference Share Capital

1,000,000
1,000,000

625,000
600,000
625,000
600,000

1,000,000

APC Chapter 10 (2007 edition)

c.
d.

e.

Ordinary Share Capital

Treasury Shares - Ordinary Share Capital (2,500 sh x P55)
Cash
Preference Share Capital (3,000 sh x P100)
Preference Share Premium (3,000 x P25)
Ordinary Share Capital (3,000 sh x P50)
PIC from Conversion of PSC into OSC
Cash (1,500 sh x P62)
Treasury Shares (1,500 sh x P55)
PIC from Sale of Treasury Shares

f.

Received 2,000 ordinary shares as donation from a major shareholder

g.

Cash (2,000 x P54)

Donated Capital

h.

i.

j.
k.

Cash (1,000 sh x P60)

Treasury Shares (1,000 sh x P55)
PIC from Sale of Treasury Shares
Ordinary Share Capital, P50 par (23,000 x P50)
Ordinary Share Premium
Ordinary Share Capital, P30 stated value (23,000 sh x P30)
PIC from Exchange of Par for No-Par Shares
Income Summary
Retained Earnings
Retained Earnings
Dividends Payable
PS = 7,000 sh x P100 x 10% = P70,000
CS = 23,000 sh x P1
= 23,000

2.
SHAREHOLDERS EQUITY
Contributed Capital:
Share Capital:
10% Preference Share Capital, P100 par, 20,000 shares
authorized, 7,000 shares issued and outstanding
Ordinary Share Capital, P30 stated value, 50,000 shares
authorized, 23,000 shares issued and outstanding
Additional Paid-in Capital:
Preference share Premium
Paid-in Capital from Exchange of Par for No-Par Shares
Paid-in Capital from Sale of Treasury Shares
Paid-in Capital from Conversion of PSC into OSC
Donated Capital
Total Contributed Capital
Retained Earnings
Total Shareholders Equity

page 4

1,000,000
137,500
137,500
300,000
75,000
150,000
225,000
93,000
82,500
10,500

108,000
108,000
60,000
55,000
5,000
1,150,000
200,000
690,000
660,000
750,000
750,000
93,000
93,000

P700,000
690,000
P175,000
660,000
15,500
225,000
108,000

P1,390,000

1,183,500
P2,573,500
657,000
P3,230,500

APC Chapter 10 (2007 edition)

P 10-2
Requirement 1
a. Treasury Shares Ordinary SC (5,000 sh x P16)
Cash
Retained Earnings
Retained Earnings Appropriated for Treasury Shares
b.

c.

d.

e.

f.
g.

Preference Share Capital (10,000 sh x P100)

Preference Share Premium (10,000 sh x P5)
PIC from Conversion of PSC into OSC
Ordinary Share Capital (10,000 x 4 x P20)
Accounts Payable
Ordinary Share Capital (500 sh x P20)
Ordinary Share Premium
Retained Earnings
Dividends Payable
PSC= 40,000 x P100 = P4,000,000 x 5% =
P200,000
OSC = (150,000 + 40,000 + 500 5,000) x P2 =P371,000

page 5

80,000
80,000
80,000
80,000
1,000,000
50,000
250,000
800,000
12,500
10,000
2,500
571,000
571,000

Land
Treasury Shares (2,000 sh x P16)
PIC from Sale of Treasury Shares

50,000

Retained Earnings Appropriated for treasury Shares

Retained Earnings

32,000

Ordinary Share Capital, P20 par(150,000 + 40,000 + 500) x P20

Ordinary Share Capital, P10 par
Income Summary
Retained Earnings

2.
SHAREHOLDERS EQUITY
Contributed Capital:
Share Capital:
5% Preference Share Capital, P100 par, 40,000 shares
issued and outstanding
Ordinary Share Capital, P10 par, 381,000 shares issued,
378,000 shares outstanding, 3,000 shares in treasury
Additional Paid-in Capital:
Preference Share Premium
Ordinary Share Premium
Paid-in Capital from Sale of Treasury Shares
Paid-in Capital from Conversion of PSC into OSC
Total Contributed Capital
Retained Earnings:
Retained Earnings Appropriated for treasury Shares
Unappropriated Retained Earnings
Total Contributed Capital and Retained Earnings
Less Treasury Shares at Cost (3,000 shares)

32,000
18,000
32,000
3,810,000
3,810,000
200,000
200,000

P4,000,000
3,810,000
P 200,000
752,500
18,000
250,000
P 48,000
1,081,000

P 7,810,000

1,220,500
P 9,030,500
1,129,000
P10,159,500
48,000

APC Chapter 10 (2007 edition)

page 6

Total Shareholders Equity

P10,111,500

P 10 3
SHAREHOLDERS EQUITY
Contributed Capital:
Share Capital:
10% Preference Share Capital, P50 par, 115,000
shares issued and outstanding
P 5,750,000
Ordinary Share Capital, P5 par, 2,050,000 shares
issued, including 5,000 shares in the treasury
10,250,000
Additional paid-in capital:
Preference Share Premium
P 1,150,000
Ordinary Share Premium
5,375,000
Paid-in Capital from Sale of Treasury Shares
30,000
Total Contributed Capital
Retained Earnings:
Retained Earnings Appropriated for Treasury Shares
P 70,000
Unappropriated Retained Earnings
4,310,000
Total Contributed Capital and Retained Earnings
Less Treasury Shares, at cost (5,000 shares)
Total Shareholders Equity
*A work sheet may be prepared to facilitate computation of the above balances.

P16,000,000

6,555,000
P22,555,000
4,380,000
P26,935,000
70,000
P26,865,000

Problem 10 4
Assets
Liabilities
SE
APIC
RE
Net Income
1.
D
NE
D
NE
NE
NE
2.
I
NE
I
I
NE
NE
3.
I
NE
I
D*
NE*
NE
I
NE
I
NE*
D*
NE
4.
NE
NE
NE
D
D
NE
*The indicated loss may be debited to the APIC arising from sale of the treasury Share Capital in No. 2
or such indicated loss may be debited to retained earnings.
P 10-5
Javier Company
Statement of Changes in Shareholders Equity
For the Fiscal Year Ended June 30, 2009
Balances, June 30, 2008
Issuance of 5,000 PSC @ P140
Issuance of 20,000 OSC @ P70
Retirement of 1,000 PSC @ P150
Purchase of 500 TS @ P80
Share l split of 2 for 1
Reissuance of TS @ P52
Declaration of dividends
PSC = P3,400,000 x 10%
OSC = 235,000 x P6
Profit for the year
Balances, June 30, 2009

PS
P3,000,000
500,000

OS
P1,000,000
200,000

( 100,000)

APIC
P 9,200,000
200,000
1,200,000
(
40,000)

RE
P2,550,000
(

TS

10,000)
P400,000

60,000

P3,400,000

P1,200,000

P10,620,000

( 200,000)
( 340,000)
( 1,410,000)
750,000
P1,540,000

P200,000

APC Chapter 10 (2007 edition)

page 7

MC10-1

Total profit since incorporation

Total cash dividends paid
Total value of Share Capital dividends distributed
Retained earnings, end

MC10-2

1/7 - 40,000 sh x P12

12/2 - 6,000 sh x P13
12/31- Profit for the year
Total shareholders equity, 12/31/08

MC10-3

P15 par x 2 = P30 5

MC10-4

200,000 sh 2 = 100,000 sh x P5

MC10-5

15,000 sh x 3 x p25

P1,125,000

MC10-6

1/1/07 100,000 sh x P15

2007 2009 - Profit
- Cash dividends
1/10/09
- Treasury Shares (6,000 sh x P12)
11/20/09
- Reissue of Treasury Shares (4,000 sh x P8)
Total shareholders equity

P1,500,000
450,000
( 230,000)
( 72,000)
32,000
P1,680,000

MC10-7

MC10-8

Proceeds from sale of treasury Share Capital

Cost of treasury Share Capital
Paid-in capital from sale of treasury Share Capital

P 210,000
120,000
P 90,000

MC10-9
MC10-10

B
C

TM 39
1.
T
2.
T
3.
F
4.
F
5.
F

6.
7.
8.
9.
10.

T
T
T
F
T

P 420,000
( 130,000)
( 30,000)
P 260,000
P 480,000
( 78,000)
300,000
P 702,000
P6.00

11.
12.
13.
14.
15.

TM 40
1.
Treasury shares
2.
Convertible preference shares
3.
Stock or share split / share split-up
4.
Recapitalization
5.
Paid-in Capital from Retirement of Share Capital
6.
Cost method
7.
Share split down / reverse share split
8.
Retained Earnings

500,000 shs

T
T
F
F
T

16.
17.
18.
19.
20.

F
F
T
T
F

APC Chapter 10 (2007 edition)

9.
10.
11.
12.
13.
14.
15.

Decrease
Retained Appropriated for Treasury shares
Memorandum entry
Selling price
Contributed Capital
Reacquisition by donation
Retirement of share capital

TM 41
1. D
2, C
3. D
4. A
5. B
6. A
7. D
8. C
9. C
10. D
11. A
12. D
13. C
14. B
15. B
16. A
17.
18.
19.
20.

page 8

A
C
B
B

6,000 x P20 = P120,000 (same as before the Share Capital split)

20,000 x P30 = P600,000
Authorized - 10,000; Issued - 4,400; Outstanding - 4,400 - 500 = 3,900
Authorized - 10,000 x 2 = 20,000; Issued - (4,400 + 100) x 2 = 9,000;
Outstanding - (4,400 - 500 + 100) x 2 = 8,000
P1,650,000 - (1,000 shares x P40) = P1,610,000
100,000 shares x P30 = P3,000,000
(100,000 sh x P50) + (5,000 sh x P20) - (15,000 sh x P15) = P4,875,000
100,000 shares x 3 - 300,000 shares - 15,000 shares = 285,000 shares

TM 42
Problem A:
Outstanding
Shares
1.
230,000
2.
400,000
3.
400,000
4.
200,000
5.
195,000

Ordinary
Share Capital
P 4,600,000
4,000,000
8,000,000
3,000,000
3,900,000

Add'l Paid-In
Capital
P1,350,000
1,200,000
1,200,000
2,200,000
1,180,000

TM 43
a.
Preference Share Capital (500 sh x P100)
Preference Share Premium (500 sh x P20)
Paid-In Capital from Retirement of PSC
Cash (500 sh x P115)
PSC 3,500 shs
b.

Retained
Earnings
P4,650,000
5,400,000
1,400,000
5,400,000
5,400,000

TSE
P10,600,000
10,600,000
10,600,000
10,600,000
10,480,000

50,000
10,000
2,500
57,500

OSC 10,000 shs

Treasury Shares (1,000 sh x P25)

Cash

25,000
25,000

APC Chapter 10 (2007 edition)

page 9

Cash
Treasury Shares
Paid-In Capital from Sale of Treasury Shares
PSC 4,000 shs
c.

d.

25,000
3,000

OSC 10,000shs

Preference Share Capital (1,000 sh x P100)

Preference Share Premium (1,000 sh x P20)
Ordinary Share Capital (1,000 sh x 4 x P20)
PIC from Conversion of PSC into OSC
PSC 3,000 shs

28,000

100,000
20,000
80,000
40,000

OSC 14,000 shs

Ordinary Share Capital, P20 par

Ordinary Share Capital, P5 par
PSC 4,000 shs
OSC 40,000 shs

200,000
200,000