Basic Capital Transactions

BASIC CAPITAL TRANSACTIONS PREFERRED STOCK Shares Issued & Price 23. The stockholders’ equity of SWEET TOOTH at the end of 1993 and 1992 are as follows: 1993 1992 Preferred stock, P100 par, 12% P1,000,000 P 600,000 Common stock, P20 par 2,000,000 1,800,000 Paid in capital in excess of par Preferred 16,000 Common 4,350,000 3,750,000 Retained earnings 80,000 180,000 How many shares of preferred stock were issued in 1993 and at what price? (E) RPCPA 1093 A. B. C. D. No. of preferred shares P4,000 4,000 10,000 10,000 Price P100 P104 P100 P104 COMMON STOCK Proceeds from Sale of Common Stock 18. Data from the balance sheet of Alpha Builders Corp. show Unissued Stock of P40,000; Capital Stock Authorized P100,000; Premium on Stock, P4,000; Subscriptions Receivable P16,000; and Capital Stock Subscribed P30,000. How much cash was collected from the sale of stock? (M) A. P78,000 C. P104,000 B. P88,000 D. Some other answer. RPCPA 0579 Issue Price 43. A firm has the balance sheet accounts, common stock, and paid-in capital in excess of par, with values of $10,000 and $250,000, respectively. The firm has 10,000 common shares outstanding. If the firm had a par value of $1, the stock originally sold for (E) A. $24/share. C. $26/share. B. $25/share. D. $30/share. Gitman

44. A firm has the balance sheet accounts, common stock, and paid-in capital in excess of par, with values of $40,000 and $500,000, respectively. The firm has 40,000 common shares outstanding. If the firm had a par value of $1, the stock originally sold for (E) A. $11.50/share. C. $13.50/share. B. $12.50/share. D. $15.50/share. Gitman

LUMPSUM ISSUANCE Bonds & Stocks Share premium Fair value of stocks not known 1. On July 1 of the current year, Boston Corp., a closely held corporation, issued 6% bonds with a maturity value of $60,000, together with 1,000 shares of its $5 par value common stock, for a combined cash amount of $110,000. The market value of Boston's stock cannot be ascertained. If the bonds had been issued separately, they would have sold at a discount for $40,000 on an 8% yield-to-maturity basis. What amount should Boston record for share premium on the issuance of the stock? (E) A. $45,000 C. $65,000 B. $55,000 D. $75,000 AICPA 1192

2. On July 1, 2012, Abysmal Company issued 6% bonds with a maturity value of P,0600,000, together with 10,000 ordinary shares with P50 par value for a combined cash amount of P11,100,000. The market value of the ordinary share cannot be determined. If the bonds were issued separately, the bonds would have sold for P4,000,000 on an 8% yield to maturity basis. What amount should be reported for share premium on the issuance of the ordinary shares? (E) A. 4,500,000 C. 6,500,000 B. 5,500,000 D. 7,500,000 CPAR 1012

2. On July 1, 2009, Georgia Company issued 10% bonds with a maturity value of P5,000,000 together with 50,000 shares with P50 par value ordinary shares for a combined cash amount of P12,000,000. The market value of Georgia’s ordinary shares cannot be ascertained. If the bonds were issued separately, they would have sold for P5,500,000. What amount should Georgia report for share premium on the issuance of the share premium? A. 1,500,000 C. 6,500,000 B. 4,000,000 D. 9,500,000 Siy

2. On September 1, 2001, Jordan Corp., a closely held corporation, issued 6% bonds with a maturity value of $120,000, together with 2,000 shares of its $5 par value common stock, for a combined cash amount of $220,000. The market value of Jordan’s stock cannot be

ascertained. If the bonds were issued separately, they would have sold for $80,000 on an 8% yield-to-maturity basis. What amount should Jordan record for share premium on the issuance of the stock? (E) A. $90,000 C. $130,000 B. $110,000 D. $150,000 AICPA 1192 Preferred & Common Stocks Total Value of Preferred Stock Relative sales value method 3. Hiro Corp. issues 1,000 €5 par value ordinary shares and 1,000 €20 par value preference shares for a lump sum of €60,000. At the issue date, the ordinary shares were selling for €36 and the preference shares were selling for €28. How much is recorded in Hiro’s statement of financial position for the preference shares? (E) A. €26,250 C. €31,000 B. €28,750 D. €36,000 KW&W 1e 4. Norton Company issues 4,000 shares of its $5 par value ordinary shares having a fair value of $25 per share and 6,000 shares of its $15 par value preference shares having a fair value of $20 per share for a lump sum of $192,000. What amount of the proceeds should be allocated to the preference shares? (E) A. $90,000 C. $120,000 B. $104,727 D. $172,000 KW&W 1e 5. Wheeler Company issued 5,000 shares of its $5 par value ordinary shares having a market value of $25 per share and 7,500 shares of its $15 par value preference shares having a market value of $20 per share for a lump sum of $240,000. The proceeds allocated to the preference shares is (E) A. $109,091 C. $150,000 B. $130,909 D. $215,000 KW&W 1e 6. On February 1, Lopez Corp. issued 1,000 shares of its $10 par common and 2,000 shares of its $10 par convertible preferred stock for a lump sum of $40,000. At this date, Lopez’s common stock was selling for $18 per share and the convertible preferred stock for $13.50 per share. The amount of proceeds allocated to Lopez’s preferred stock should be (E) A. $22,000 C. $27,000 B. $24,000 D. $30,000 AICPA 0592 7. On March 1, 1992, Rya Corp. issued 1,000 shares of its $20 par value common stock and 2,000 shares of its $20 par value convertible preferred stock for a total of $80,000. At this

date, Rya’s common stock was selling for $36 per share, and the convertible preferred stock was selling for $27 per share. What amount of the proceeds should be allocated to Rya’s convertible preferred stock? (E) A. $44,000 C. $54,000 B. $48,000 D. $60,000 AICPA 0592

1. On March 1, 2012, Abeyance Company issued 10,000 ordinary shares with P200 par value and 20,000 convertible preference shares with P200 par value for a total of P8,000,000. On this date, the ordinary share is selling at P360 and the preference share is selling at P270. What amount of the proceeds should be allocated to the convertible preference shares? (E) A. 4,400,000 C. 5,400,000 B. 4,800,000 D. 6,000,000 CPAR 1012

1. On May 1, 2009, Serbia Company issued 60,000 shares of its P50 par value ordinary shares and 20,000 shares of its P100 par value preference shares for a total consideration of P7,500,000. At this date, the ordinary shares were selling for P100 per share and the preference shares was selling for P150 per share. What amount of the proceeds should be allocated to the preference shares? A. 2,000,000 C. 3,000,000 B. 2,500,000 D. 4,000,000 Siy

55. On July 1, 2001, Alou Co. issued 1,000 shares of its $10 par common stock and 2,000 shares of its $10 par convertible preferred stock for a lump sum of $50,000. At this date Alou's common stock was selling for $24 per share and the convertible preferred stock for $18 per share. The amount of the proceeds allocated to Alou's preferred stock should be (E) A. $25,000. C. $30,000. B. $27,500. D. $36,000. K, W & W

59. On July 1, Rainbow Corporation issued 2,000 shares of its $10 par common and 4,000 shares of its $10 par preferred stock for a lump sum of $80,000. At this date, Rainbow's common stock was selling for $18 per share and the preferred stock for $13.50 per share. The amount of proceeds allocated to Rainbow's preferred stock should be (E) A. $40,000. C. $54,000. B. $48,000. D. $60,000. S, S & S

8. On July 1, 2012, Nall Co. issued 2,500 shares of its $10 par ordinary shares and 5,000 shares of its $10 par convertible preference shares for a lump sum of $125,000. At this date Nall's ordinary shares were selling for $24 per share and the convertible preference shares for $18 per share. The amount of the proceeds allocated to Nall's preference shares should be (E)

A. $62,500. B. $68,750.

C. $75,000. D. $90,000. AICPA adapted

Total Value of Common Stock 9. Glavine Company issues 6,000 shares of its $5 par value ordinary shares having a market value of $25 per share and 9,000 shares of its $15 par value preference shares having a fair value of $20 per share for a lump sum of $288,000. The proceeds allocated to the ordinary shares is (E) A. $30,000 C. $150,000 B. $130,909 D. $157,091 KW&W 1e 30. A corporation issues 50 "packages" of securities for $154 per package. Each package consists of three shares of $5 par common stock and one share of $50 par preferred stock. If the market values of $40 per share for the common stock and $100 per share for preferred stock are known, the journal entry to record the sale would assign a total value to the common stock (Common Stock and Share premium on Common Stock) of (E) A. $2,200 C. $5,775 B. $4,200 D. $6,000 NB&J 11e

5. What amount of the proceeds should be allocated to the preference shares? (E) A. P1,875,000 C. P2,500,000 B. P2,000,000 D. P3,000,000

6. What amount of the proceeds should be allocated to the preference shares, if the shares are redeemable at the option of the holder after 5 years? (E) A. P1,875,000 C. P2,500,000 B. P2,000,000 D. P3,000,000

DONATED CAPITAL Common Stocks 12. On December 1, 1992, Line Corp. received a donation of 2,000 shares of its $5 par value common stock from a stockholder. On that date, the stock's market value was $35 per share. The stock was originally issued for $25 per share. By what amount would this donation cause total stockholders' equity to decrease? (M) A. $0 C. $50,000 B. $20,000 D. $70,000 AICPA 0593

14. On December 31, 2001, Circle Corp. received a contribution of 4,000 shares of its $10 par value common stock from a shareholder. On that date, the stock market’s value was $70 per share. The stock was originally issued for $50 per share. By what amount does this contribution cause total shareholders’ equity to decrease? (M) A. $0 C. $200,000 B. $40,000 D. $280,000 AICPA 0593

13. On December 1, 2000, Line Corp. received a donation of 2,000 shares of its $5 par value common stock from a shareholder. On that date, the stock ‘s fair value was $35 per share. The stock was originally issued for $25 per share. By what amount would this donation cause total shareholders’ equity to decrease if Line accounts for treasury stock using the cost method? (M) A. $0 C. $50,000 B. $20,000 D. $70,000 AICPA 0593

Share premium – Ordinary Shares 11. Hiro Corp. issues 1,000 €5 par value ordinary shares and 1,000 €20 par value preference shares for a lump sum of €60,000. At the issue date, the ordinary shares were selling for €36 and the preference shares were selling for €28. The Share Premium—Ordinary account will be credited for (E) A. €26,250 C. €31,000 B. €28,750 D. €36,000 KW&W 1e

SHARE PREMIUM Issuance 42. Martin Corporation was organized on January 3, 2004. Martin was authorized to issue 50,000 shares of common stock with a par value of $10 per share. On January 4, Martin issued 30,000 shares of common stock at $25 per share. On July 15, Martin issued an additional

10. Manning Company issued 10,000 shares of its $5 par value ordinary shares having a fair value of $25 per share and 15,000 shares of its $15 par value preference shares having a fair value of $20 per share for a lump sum of $480,000. How much of the proceeds would be allocated to the ordinary shares? (E) A. $50,000 C. $250,000 B. $218,182 D. $255,000 KW&W 1e

Comprehensive Use the following information for the next two questions. Cabarles On March 1, 2011, Mall Company issued 60,000, P50 par value, ordinary shares and 20,000, P100 par value, preference shares for a total consideration of P7,500,000. At this date, the ordinary share was selling for P100 per share and the preference share was selling for P150 per share.

10,000 shares at $20 per share. Martin reported income of $33,000 during 2004. In addition, Martin declared a dividend of $.50 per share on December 31, 2004. The amount reported on Martin Corporation's December 31, 2004, balance sheet as share premium was (E) A. $400,000. C. $563,000. B. $550,000. D. $950,000. S, S & S LEGAL CAPITAL Issue price of no par stock Par or stated value of (1) issued stock, (2) subscribed stock & (3) stock dividends distributable 26. The stockholders’ equity section of GASPARELLI revealed the following information on January 1, 1993: Preferred stock, P100 par value P230,000 Paid-in capital in excess of par value preferred 80,500 Common stock, P15 par value 525,000 Paid in capital in excess of par – common 275,000 Subscribed common stock 5,000 Retained earnings 190,000 Notes payable 400,000 Subscriptions receivable – common 40,000 How much is the legal capital of the company? (M) A. P0.755 million C. P1.115 million B. P0.76 million D. P1.3055 million RPCPA 1093 26. The shareholders’ equity section of Glee Company revealed the following information on December 31, 2013. Preference share capital, P100 par P2,300,000 Share premium – preference share 805,000 Ordinary share capital, P15 par 5,250,000 Share premium – ordinary share 2,750,000 Subscribed ordinary share capital 500,000 Retained earnings 1,900,000 Notes payable 4,000,000 Subscriptions receivable – common 400,000 How much is the legal capital ? (M) A. 7,650,000 C. 9,950,000 B. 8,050,000 D. 11,605,000 Valix 13 CONTRIBUTED CAPITAL

Common Stock Total Par Value of Common Stock Issued Issuance 15. A company is started in Year One and has 100,000 shares of common stock authorized with a par value of $10 per share. The company issues 20,000 shares of this stock for $21 per share in Year One and another 10,000 shares for $24 per share in Year Two. What is recorded in the company’s Common Stock account at the end of Year Two? (E) A $240,000 C $660,000 B $300,000 D $1,000,000

Total Contributed Capital Issuance for cash & nonmonetary exchange 16. Berry Corporation has 50,000 shares of $10 par ordinary shares authorized. The following transactions took place during 2010, the first year of the corporation’s existence:  Sold 5,000 ordinary shares for $18 per share.  Issued 5,000 ordinary shares in exchange for a patent valued at $100,000. At the end of the Berry’s first year, total contributed capital amounted to A. $40,000. C. $100,000. B. $90,000. D. $190,000. KW&W 1e

Issuance, Issuance 17. Poodle Corporation was organized on January 3, 2011. The firm was authorized to issue 100,000 shares of $5 par common stock. During 2011, Poodle had the following transactions relating to shareholders' equity:  Issued 30,000 shares of common stock at $7 per share.  Issued 20,000 shares of common stock at $8 per share.  Reported a net income of $100,000.  Paid dividends of $50,000. What is total Paid-in capital at the end of 2011? (E) A. $320,000. C. $420,000. B. $370,000. D. $470,000. S&S 6e

18. Value Corporation was organized on January 3, 2003. The firm was authorized to issue 100,000 shares of $5 par common stock. During 2003, Value had the following transactions relating to shareholders' equity:  Issued 10,000 shares of common stock at $7 per share.  Issued 20,000 shares of common stock at $8 per share.  Reported a net income of $100,000.  Paid dividends of $50,000.

What is total contributed capital at the end of 2003? (E) A. $280,000. C. $330,000. B. $230,000. D. $180,000. Issued, subscribed 19. Presented below is information related to Getty Corporation: Subscriptions Receivable, Common Stock Common Stock, $1 par Common Stock Subscribed Paid-in Capital in Excess of Par-Common Stock Preferred 8 1/2% Stock, $50 par Paid-in Capital in Excess of Par-Preferred Stock Retained Earnings Treasury Common Stock (at cost) The total paid-in capital (cash collected) related to the common stock is A. $3,810,000. C. $4,050,000. B. $3,930,000. D. $4,170,000.

S, S & T

$ 120,000 3,600,000 240,000 210,000 1,200,000 240,000 900,000 90,000 K, W & W

$ 35,000 100,000 2,500 ? 1,000

Trial balance 8. The adjusted trial balance of Makati Company at December 31, 2009 includes the following account balances: Share capital 5,000,000 Share premium 500,000 Accumulated profits 2,000,000 Revaluation reserve 1,000,000 Translation reserve – debit 300,000 Treasury shares, at cost 200,000 What amount from the above is Makati’s contributed capital? (E) A. 5,000,000 C. 5,500,000 B. 5,300,000 D. 8,000,000 Siy Common Stock & Preferred Stock Premium on Common Stock 93. The following information is provided for Spring Company: Retained earnings Preferred stock, 5%, $50 par Organization expense Premium on common stock Share premium from recall of preferred stock

K, W & W

$ 120,000 3,600,000 240,000 210,000 1,200,000 240,000 900,000 90,000

K, W & W

$ 120,000 3,600,000 240,000 210,000 1,200,000 240,000 900,000 90,000

Premium on bonds payable 3,000 Common stock, $10 par 300,000 If total contributed capital is $406,000, what is the amount of premium on common stock for Spring Company? A. $2,500 C. $5,000 B. $3,500 D. $6,000 NB&J 11e

Common Stock Subscribed 31. Presented below is information related to Getty Corporation: Subscriptions Receivable, Common Stock Common Stock, $1 par Common Stock Subscribed Paid-in Capital in Excess of Par-Common Stock Preferred 8 1/2% Stock, $50 par Paid-in Capital in Excess of Par-Preferred Stock Retained Earnings Treasury Common Stock (at cost) The total paid-in capital related to the common stock subscribed is A. $120,000. B. $210,000. C. $450,000. D. cannot be determined from the information given.

Total Paid-in Capital of Common Stock Composition 29. Presented below is information related to Getty Corporation: Subscriptions Receivable, Common Stock Common Stock, $1 par Common Stock Subscribed Paid-in Capital in Excess of Par-Common Stock Preferred 8 1/2% Stock, $50 par Paid-in Capital in Excess of Par-Preferred Stock Retained Earnings Treasury Common Stock (at cost) The total paid-in capital (cash collected) related to the common stock is A. $3,810,000. C. $4,050,000. B. $3,930,000. D. $4,170,000. Total Contributed Capital

Issuance, subscribed 20. Baby Jean Company was incorporated on January 1, 2003, with the following authorized capitalization:  200,000 shares of common stock, no par, stated value P100 per share  200,000 shares of 10% cumulative preferred stock, par value P50 per share. During 2003 Baby Jean issued 150,000 shares of common stock for a total of P18,000,000 and 50,000 shares of preferred stock at P60 per share. In addition, on December 15, 2003, subscriptions for 20,000 shares of preferred stock were taken at a purchase price of P100. These subscribed shares were paid for on January 2, 2004. Net income for 2003 was P5,000,000. What should Baby Jean report as total contributed capital on its December 31, 2003 balance sheet? (M1**) A. 21,000,000 C. 26,000,000 B. 23,000,000 D. 28,000,000 CPAR 50. Oldham Corporation was incorporated on January 1, 2001, with the following authorized capitalization:  20,000 shares of common stock no par value, stated value $40 per share.  6,000 shares of 5% cumulative preferred stock, par value $10 per share. During 2001, Oldham issued 10,000 shares of common stock for a total of $600,000 and 5,000 shares of preferred stock at $24 per share. In addition, on December 20, 2001, subscriptions for 1,000 shares of preferred stock were taken at a purchase price of $30. These subscribed shares were paid for on January 2, 2002. What should Oldham report as total paid-in capital on its December 31, 2001, balance sheet? (M1**) A. $690,000. C. $720,000. B. $696,000. D. $750,000. K, W & W 21. The Amlin Corporation was incorporated on January 1, 2010, with the following authorized capitalization:  20,000 shares of common stock, no par value, stated value $40 per share.  5,000 shares of 5% cumulative preferred stock, par value $10 per share. During 2010 Amlin issued 12,000 shares of common stock for a total of $600,000 and 3,000 shares of preferred stock at $16 per share. In addition, on December 20, 2010, subscriptions for 1,000 shares of preferred stock were taken at a purchase price of $17. These subscribed shares were paid for on January 2, 2011. What should Amlin report as total contributed capital on its December 31, 2010 balance sheet? (M1**) A: $520,000 C: $665,000 B: $648,000 D: $850,000 Wiley 11 50. The Amelia Corporation was incorporated on January 1, 2005, with the following authorized

capitalization:  40,000 shares of common stock, no par value, stated value $40 per share  10,000 shares of 5 percent cumulative preferred stock, par value $10 per share During 2005, Amelia issued 24,000 shares of common stock for a total of $1,200,000 and 6,000 shares of preferred stock at $16 per share. In addition, on December 20, 2005, subscriptions for 2,000 shares of preferred stock were taken at a purchase price of $17. These subscribed shares were paid for on January 2, 2006. What should Amelia report as total contributed capital on its December 31, 2005, balance sheet? (M1**) A. $1,040,000 C. $1,296,000 B. $1,262,000 D. $1,330,000 S, S & S

7. The Amelia Corporation was incorporated on January 1, 2009, with the following authorized capitalization: • 50,000 ordinary shares, no par value, stated value P20 per share • 20,000 10 percent cumulative preference shares, par value P100 per share During 2009, Amelia issued 30,000 ordinary shares for a total of P1,350,000 and 6,000 preference shares at P130 per share. In addition, on December 20, 2009, subscriptions for 2,000 shares of preferred stock were taken at a purchase price of P150, half of the price was paid for on this date. The balance for the subscribed shares was paid for on March 2, 2010. What should Amelia report as total contributed capital on its December 31, 2009, balance sheet? A. 1,400,000 C. 2,280,000 B. 2,130,000 D. 2,430,000 Siy

22. The stockholders’ equity section of Norm Company revealed the following information on December 31, 2005: Preferred stock, P100 par 5,000,000 Additional paid in capital-preferred 2,000,000 Common stock, P50 3,200,000 Additional paid in capital-common 500,000 Subscribed common stock 800,000 Retained earnings-appropriated 250,000 Unrealized loss on available for sale securities 600,000 Subscription receivable-common 400,000 Retained earnings- unappropriated 3,500,000 Treasury stock 1,000,000 How much is the contributed capital of Norm Company as of December 31, 2005? (M) A. P10,100,000 C. P11,100,000 B. P10,500,000 D. P11,500,000 R. Ocampo

23. The following information is provided for Murphy Corporation: Common stock, $10 par Bonds payable Share premium from conversion of preferred stock into common Retained earnings Share premium on preferred stock Common stock subscribed Unrealized capital Premium on bonds payable Preferred stock, 6%, $100 par What is the amount of contributed capital for Murphy Corporation? A. $430,000 C. $463,000 B. $433,000 D. $468,600 $340,000 28,000 3,000 100,000 10,000 30,000 5,600 2,000 80,000 NB&J 11e

Outstanding Balances 24. On September 1, 1992, Hyde Corp., a newly formed company, had the following stock issued and outstanding:  Common stock, no par, $1 stated value, 5,000 shares originally issued for $15 per share.  Preferred stock, $10 par value, 1,500 shares originally issued for $25 per share. Hyde’s September 1, 1992, statement of stockholders’ equity should report AICPA 1192 A. B. C. D. Common stock $ 5,000 $ 5,000 $75,000 $75,000 Preferred stock $15,000 $37,500 $15,000 $37,500 Share premium $92,500 $70,000 $22,500 $ 0 25. On April 1, 1993, Hyde Corp., a newly formed company, had the following stock issued and outstanding: • Common stock, no par, $1 stated value, 20,000 shares originally issued for $30 per share. • Preferred stock, $10 par value, 6,000 shares originally issued for $50 per share. Hyde's April 1, 1993, statement of stockholders' equity should report: AICPA 0593 A. B. C. D. Common Stock $20,000 $20,000 $600,000 $600,000 Preferred Stock $60,000 $300,000 $60,000 $300,000 Share premium $820,000 $580,000 $240,000 $0 26. On February 1 of the current year, King Corp., a newly formed company, had the following stock issued and outstanding:  Common stock, no par, $1 stated value, 10,000 shares originally issued for $15 per share

*.

 Preferred stock, $10 par value, 3,000 shares originally issued for $25 per share King's February 1 statement of shareholders' equity should report AICPA 0593 A. B. C. D. Common Stock $10,000 $10,000 $150,000 $150,000 Preferred Stock $30,000 $75,000 $30,000 $75,000 Paid-in Capita $185,000 $140,000 $45,000 $0

On April 1, 1997, Empire Corp., a newly formed company, had the following stock issued and outstanding:  Common stock, no par, P2 stated value, 20,000 shares originally issued for P60 per share.  Preferred stock, P20 par value, 6,000 shares originally issued for P100 per share. Empire’s April 1, 1997 statement of stockholders’ equity should report common stock, preferred stock, and additional paid in capital of RPCPA 0597 A. B. C. D. Common stock P 40,000 P 40,000 P1,200,000 P1,200,000 Preferred stock P 120,000 P 600,000 P 120,000 P 600,000 Share premium P1,640,000 P1,100,000 P 480,000 P 0

NONMONETARY EXCHANGE Incorporation of a Sole Proprietorship Capital Account 47. On January 2, 1996, Reims purchased the net assets of Alador Laundry, a sole proprietroship, for P3,500,000, and commenced operations of Saint Etienne Laundry, a sole proprietorship. The assets have a carrying amount of P3,750,000 and a market value of P3,600,000. In Saint Etienne’s cash basis financial statements for the year ended December 31, 1996, Saint Etienne reported revenues in excess of expenses of P600,000. Reim’s drawings during 1996 were P200,000. In Saint Etienne’s financial statements, what amount should be reported as Capital – Reims? A. P3,900,000 C. P4,100,000 B. P4,000,000 D. P4,150,000 RPCPA 1097

Share premium 35. The December 31, 1995 condensed balance sheet of Wurzburg Services, an individual proprietorship, follows: Current assets P280,000 Equipment (net) 260,000 P540,000

Liabilities Tony Wurzburg, Capital

P140,000 400,000 P540,000

Fair values at December 31, 1995 are as follows: Current assets P320,000 Equipment 420,000 Liabilities 140,000 On January 2, 1996, Wurzburg Services was incorporated with 5,000 shares of P20 par value common stock issued. How much should be credited to share premium? A. P400,000 C. P500,000 B. P460,000 D. P640,000 RPCPA 1096 49. The December 31, 2010, condensed balance sheet of Rhome Services, an individual proprietorship, follows: Current assets P140,000 Equipment (net) 130,000 P270,000 Liabilities P 70,000 Ted Rhome, Capital 200,000 P270,000 Fair values at December 31, 2010, are as follows: Current assets P160,000 Equipment 210,000 Liabilities 70,000 On January 2, 2010, Rhome Services was incorporated, with 10,000 shares of P5 par value common stock issued. How much should be credited to additional paid-in capital? A. 210,000. C. 250,000. B. 230,000. D. 320,000. Siy 54. The December 31, 2001, condensed balance sheet of Rhome Services, an individual proprietorship, follows: Current assets $140,000 Liabilities $ 70,000 Equipment (net) 130,000 Ted Rhome, Capital 200,000 $270,000 $270,000 Fair values at December 31, 2001, are as follows: Current assets $160,000 Equipment 210,000

Liabilities 70,000 On January 2, 2001, Rhome Services was incorporated, with 10,000 shares of $5 par value common stock issued. How much should be credited to share premium? A. $210,000. C. $250,000. B. $230,000. D. $320,000. K, W & W

P 70,000 200,000 P270,000

8. The December 31, 19_4 condensed balance sheet of Dunn Services, an individual proprietorship, follows: (3) Current assets P140,000 Equipment (net) 130,000 P270,000 Liabilities John, Dunn, Capital

Fair values at December 31, 19_4 are as follows: Current assets P160,000 Equipment 210,000 Liabilities 70,000 On January 2, 19_5, Dunn Services was incorporated with 5,000 shares of P10 par value common stock issued. How much should be credited to share premium? A. P200,000. C. P250,000. B. P230,000. D. P320,000.

RPCPA 0588

Incorporation of a Partnership No. of Shares Received 34. MAC, KUH, and NAT, partners sharing profits and losses equally, decided to form a corporation. They have capital balances, respectively, of P100,000, P100,000 and P200,000, and all of their assets and liabilities will be transferred to the corporation. Their net assets will be revalued from P400,000 to P550,000, with the substantial revaluation due to land which was originally contributed by NAT at P100,000. At P10 par value, the partners are to receive shares of stock as follows: A. 10,000, 10,000, and 35,000, respectively. B. 12,500, 12,500, and 30,000, respectively. C. 15,000, 15,000, and 25,000, respectively. D. 18,333, 18,333, and 18,334, respectively. RPCPA 0595

Questions 1 and 2 are based on the following information.

Common 720 shares 720 shares 750 shares 720 shares

Preferred 1,758 shares 1,834 shares 1,843 shares 1,384 shares

Gil Common 720 shares 720 shares 750 shares 720 shares

Roy and Gil are partners sharing profits and losses in the ratio of 1:2, respectively. On July 1, 19x7, they decided to form the R&G Corp. by transferring the assets and liabilities from the partnership to the Corporation in exchange of its stocks. The following is the post-closing trial balance of the partnership to the Corporation in exchange of its stocks. The following is the postclosing trial balance of the partnership: Debit Credit Cash P 45,000 Accounts Receivable (net) 60,000 Inventory 90,000 Fixed Assets (net) 174,000 Liabilities P 60,000 Roy, Capital 94,800 Gil, Capital 214,200 P369,000 P369,000 It was agreed that adjustments be made to the following assets to be transferred to the corporation: Accounts Receivable P 40,000 Inventory 68,000 Fixed Assets 180,600 The R&G Corporation was authorized to issue P100 par preferred stock and P10 par common stock. Roy and Gil agreed to receive for their equity in the partnership 720 shares of the common stock each, plus even multiples of 10 shares of preferred stock for their remaining interest. 1. The total number of shares of preferred and common stock issued by the Corporation in exchange of the assets and liabilities of the partnership are A. B. C. D. 2,540 shares 2,592 shares 2,642 shares 2,642 shares 1,500 shares 1,440 shares 1,440 shares 1,550 shares Preferred stock Common stock

Preferred 738 shares 758 shares 773 shares 785 shares

2. The distribution of stock to Roy and Gil are: Roy A. B. C. D.

Total Par Value of Shares Issued 12. Partners ROB and ROY, who share equally in profits and losses, have the following balance sheet as of December 31, 19x9: Cash P120,000 Accounts payable P172,000

Accounts receivable 100,000 Accum. Depreciation 8,000 Merchandise Inventory 140,000 Rob, capital 140,000 Equipment 80,000 Roy, capital 120,000 Total P440,000 Total P440,000 They agreed to incorporate their partnership, with the new corporation absorbing the net assets after the following adjustments: provision of allowance for bad debts of P10,000; statement of the inventory at its current fair value of P160,000; and recognition of further depreciation on the equipment of P3,000. The corporation’s capital stock is to have a par value of P100, and the partners are to be issued corresponding total shares equivalent to their adjusted capital balances. The total par value of the shares of capital stock that were issued to partners ROB and ROY was A. P260,000 C. P273,000 B. P267,000 D. P280,000 RPCPA 1094

Share premium 27. The December 31, 2000 condensed balance sheet of Moore and Daughter, a partnership, follows: Current assets $280,000 Liabilities $140,000 Equipment (net) 260,000 Moore & Daughter, capital 400,000 $540,000 $540,000 Fair values at December 31, 2000 are as follows: Current assets $320,000 Equipment 420,000 Liabilities 140,000 On January 2, 2001, Moore and Daughter was incorporated, with 10,000 shares of $10 par value common stock issued. How much should be credited to additional contributed capital? A. $400,000 C. $600,000 B. $500,000 D. $640,000 AICPA 0593

22. The condensed balance sheet of the partnership of Ken Sy and Ben Ty as of December 31, 19x4 showed the following: Total assets P200,000 Total liabilities 40,000 Ken Sy, capital 80,000 Ben Ty, capital 80,000 On this date, the partnership was dissolved and its net assets were transferred to a newlyformed corporation. The fair value of the assets was P24,000 more than the carrying value on the firm’s books. Each of the partners was issued 10,000 shares of the corporation’s P1 par

common stock. Immediately after effecting the transfer of the net assets, and the issuance of stock, the corporation’s share premium account would be credited for A. P136,000 C. P154,000 B. P140,000 D. P164,000 RPCPA 0594 Issuance of Stock as Compensation for Services Performed Amount Recorded for Services Performed 28. This information represents an independent transaction involving the issuance of 10,000 shares of common stock by Hessler Corporation during the year. In this situation, 10,000 shares of common stock represents the entire amount Hessler gave up in the transaction. Hessler's common stock has $5 per share par value. Hessler received services from August 1 through September 11 in exchange for the 10,000 shares of common stock. The exchange of stock took place on September 11. The market value of Hessler's common stock was $18 per share on August 1 and $20 per share on September 11. The amount recorded for the services would have been A. $50,000. C. $190,000. B. $180,000. D. $200,000. CMA 0686 Share premium 29. Ashe Corp. was organized on January 1, 2010, with authorized capital of 100,000 shares of $20 par value common stock. During 2010 Ashe had the following transactions affecting stockholders’ equity: January 10 -- Issued 25,000 shares at $22 a share. March 25 -- Issued 1,000 shares for legal services when the fair value was $24 a share. September 30 -- Issued 5,000 shares for a tract of land when the fair value was $26 a share. What amount should Ashe report for share premium at December 31, 2010? A: $50,000 C: $80,000 B: $54,000 D: $84,000 Wiley 11 Effect on Share premium Fair value of the stock 30. East Co. issued 1,000 shares of its $5 par common stock to Howe as compensation for 1,000 hours of legal services performed. Howe usually bills $160 per hour for legal services. On the date of issuance, the stock was trading on a public exchange at $140 per share. By what amount should the share premium account increase as a result of this transaction? (E) A. $135,000 C. $155,000 B. $140,000 D. $160,000 AICPA 1194

31. East Co. issued 2,000 shares of its $5 par common stock to Krannik as compensation for 1,000 hours of legal services performed. Krannik usually bills $200 per hour for legal services. On the date of issuance, the stock was trading on a pubic exchange at $160 per share. By what amount should the share premium account increase? (E) A. $190,000 C. $310,000 B. $200,000 D. $320,000 AICPA 1194

32. Mouse Co. issued 1,000 shares of its $5 par common stock to Howe as compensation for 1,000 hours of legal services performed. Jason usually bills $160 per hour for legal services. On the date of issuance, the stock was trading on a public exchange at $140 per share. By what amount should the share premium account increase as a result of this transaction? (E) A. $135,000 C. $155,000 B. $140,000 D. $160,000 AICPA 1194 F-28

2. Tacurong Company issued 5,000 shares of its P100 par common stock to a legal counsel as compensation for 500 hours of legal services performed. The legal counsel usually bills P1,800 per hour for legal services. On the date issuance, the stock was trading at a public exchange at P150 per share. By what amount should the additional paid in capital account increase as a result of this transaction? (E) A. 250,000 C. 750,000 B. 400,000 D. 900,000 CPAR 4149

33. Earl was engaged by Farm Corp. to perform consulting services. Earl’s compensation for these services consisted of 1,000 shares of Farm’s $10 par value common stock, to be issued to Earl on completion of Earl’s services. On the execution date of Earl’s employment contract, Farm’s stock had a market value of $40 per share. Six months later, when Earl’s services were completed and the stock issued, the stock’s market value was $50 per share. Farm’s management estimated that Earl’s services were worth $100,000 in cost savings to the company. As a result of this transaction, share premium should increase by (M) A. $ 30,000 C. $ 90,000 B. $ 40,000 D. $100,000 Wiley 11