PROBLEM NO.

1 - Resolve Corporation
Date
Preferred stock

1/31
8/30

Particulars
(Debit) Credit
3,000,000
420,000

12.31.05
Balance
3,420,000

Common stock

1/1
2/20
8/30
8/30
11/07

15,000
90,000
18,000
21,000
60,000

204,000

Subscribed common stock

5/30
11/07

120,000
(60,000)

60,000

Subscription receivable

5/30
11/07

(5,400,000)
4,200,000

(1,200,000)

Additional paid in capital - preferred

1/31
1/31
8/30

1,500,000
(225,000)
270,000

Additional paid in capital - common

1/1
2/20
2/20
5/30
8/30
8/30

Retained earnings

12/01
12/31

(1)

1,545,000

(2)

705,000
3,420,000
(75,000)
5,280,000
702,000
819,000

10,851,000

(3)

(870,000)
1,800,000

930,000

(4)

15,810,000

(5)

Journal entries for 2005

1/1

1/31

Property
Organization expenses
Common stock (1,500 shares x P10)
APIC - excess over par of common stock

510,000
210,000

Cash (30,000 shares x P150)

Preferred stock (30,000 shares x P100)
APIC - excess over par of preferred stock

4,500,000

APIC - excess over par of preferred stock

Cash
2/20

Cash (9,000 shares x P390)

Common stock (9,000 shares x P10)
APIC - excess over par of common stock
APIC - excess over par of common stock
Cash

5/30

8/30

Subscriptions receivable (12,000 shares x P450)

Subscribed common stock (12,000 shares x P10)
APIC - excess over par of common stock
Cash
Common stock (1,800 shares x P10)
APIC - excess over par of common stock

15,000
705,000
3,000,000
1,500,000
225,000
225,000
3,510,000
90,000
3,420,000
75,000
75,000
5,400,000
120,000
5,280,000
720,000
18,000
702,000

Building
1,530,000
Common stock (2,100 shares x P10)
APIC - excess over par of common [(2,100 sh x P400*)-21,000]
Preferred stock (4,200 shares x P100)
APIC - excess over par of preferred stock (balance)

21,000
819,000
420,000
270,000

'* (P720,000/1,800 shares)

11/07 Cash
Subscriptions receivable
Subscribed common stock (12,000 shares x P10 x 1/2)
Common stock
12/01 Retained earnings
Dividends payable - Preferred
Dividends payable - Common

4,200,000
4,200,000
60,000
60,000
870,000
342,000
528,000

*
**

* (P3,420,000/P100 x P10)
** {[(P204,000 + P60,000)/P10] x P20}
12/31 Income summary
Retained earnings

1,800,000
1,800,000

AP-5801Q

PROBLEM NO. 2 - Perseverance Corporation

2005
Transactions

12.31.04
Preferred stock
Common stock
Additional paid in capital

600,000
1,800,000
300,000

(2)
(1)
(2)
(7)
(7)

Retained earnings - appropriated

198,000

(5)
(9)

Retained earnings - unappropriated

2,250,000

(2)
(3)
(5)
(7)
(8)
(9)

Treasury stock - preferred

(90,000)

(1)

216,000
9,000
54,000
450,000
51,000
60,000
45,000
(270,000)
(57,000)
(60,000)
(501,000)
1,261,500
(45,000)
45,000

5,058,000

12.31.05
600,000
2,016,000
864,000

1
2
3

D
B
B

303,000

2,578,500

(45,000)
6,316,500

Journal entries for 2005 affecting stockholders' equity accounts:

(1) Cash (3,000 shares x P18)
54,000
Treasury stock-preferred [(90,000/ 6,000 shares) x 3,000]
APIC - from treasury stock transactions
(2) Retained earnings - unappropriated
Common stock (54,000 shares x P4)
APIC - excess over par
Preferred stock issued, 12/31/05
Treasury shares 12/31/05
Number of shares issued and outstanding
Dividends per share

Total dividends
(3) Retained earnings - unappropriated
Dividends payable
Preferred stock issued 12/01/05
Treasury shares 12/01/05 (6,000 - 3,000)
Number of shares issued and outstanding
Dividends per share

Total dividends

45,000
9,000

270,000
216,000
54,000
60,000
(6,000)
54,000
5.00
270,000
57,000
57,000
60,000
(3,000)
57,000
1.00
57,000

(4)
(5) Retained earnings - unappropriated
Retained earnings - appropriated

60,000
60,000

(6) See number 8

(7) Retained earnings - unappropriated
APIC - donated capital
APIC - from treasury stock transactions
(8) Income summary
Retained earnings - unappropriated
Net income per company's records
Fire loss charged to reserve for fire insurance
Estimated fire clean up cost
Adjusted net income
(9) Retained earnings - unappropriated
Retained earnings - appropriated for TS

501,000
450,000
51,000
1,261,500
1,261,500
1,297,500
(30,000)
(6,000)
1,261,500
45,000
45,000

PROBLEM NO. 3 - Willpower Corporation

2005
Transactions

12.31.04
Preferred stock

4,050,000

Common stock
Additional paid in capital

9,000,000
4,320,000

Retained earnings - appropriated

Retained earnings - unappropriated

1,395,000

Treasury stock

1
3
2
1
2
3
6
7
10
3
8
9
10
4
6

810,000
(162,000)
4,725,000
270,000
1,890,000
(43,200)
135,000
243,000
540,000
(37,800)
(1,625,760)
2,520,000
(540,000)
(1,080,000)
540,000

18,765,000

12.31.05
4,698,000

(1)

13,725,000
6,814,800

(2)
(3)

D
D

540,000
1,711,440

(4)

(5)

(540,000)
26,949,240

Journal entries for 2005

1)

2)

3)

4)

Cash (27,000 shares x P40)

Preferred stock (27,000 shares x P30)
APIC - premium on preferred stock

1,080,000

Cash (94,500 shares x P70)

Common stock (94,500 shares x P50)
APIC - premium on common stock

6,615,000

Preferred stock (5,400 shares x P30)

APIC - premium on PS (P1,080,000 x 5,400/135,000
Retained earnings
Cash (5,400 shares x P45)
Treasury stock-CS (13,500 shares x P80)
Cash

5)

Memo entry

6)

Cash (13,500 shares x P50)

Treasury stock (P1,080,000 x 1/2)
APIC - from treasury stock transactions

7)

10)

162,000
43,200
37,800
243,000
1,080,000
1,080,000

675,000
540,000
135,000

243,000
243,000

Retained earnings
Cash

1,625,760

Common shares issued and outstanding, 1/1/05

2) Shares issued
4) Purchase of treasury shares

180,000
94,500
(13,500)
261,000
261,000
13,500
(9,000)
4,500
531,000
2
1,062,000
563,760
1,625,760

5) Stock split
6) Reissuance of treasury shares
7) Donated shares
Reissuance of donated sh
Common shares issued and outstanding
x Dividend per share
Dividends to common
Dividends to preferred (PS balance x 12%)
Total
9)

4,725,000
1,890,000

Memo entry
Cash (9,000 shares x 1/2 x P54)
APIC - Donated capital

8)

810,000
270,000

Income summary
Retained earnings
Retained earnings
Retained earnings - appropriated (cost of TS)

1,625,760

2,520,000
2,520,000
540,000
540,000

PROBLEM NO. 4 - Grit Corporation

04-05
Transactions

6.1.04
Preferred stock

2
4

Common stock

2
4

Subscribed PS

1
2

Subsriprions receivable-PS

1
1
2

Subscribed CS

1
2
2

Subsriprions receivable-CS

1
1
2
2

Additional paid in capital

1
2
4
4
5

Total contributed capital

Retained earnings

Treasury stock - common

3
5

30,000,000
(30,000,000)
2,100,000
3,000,000
30,000,000
(30,000,000)
(31,500,000)
9,450,000
22,050,000
2,250,000
(2,100,000)
(150,000)
(23,400,000)
7,020,000
15,288,000
1,092,000
22,650,000
(1,410,000)
(1,500,000)
28,500,000
100,000

830,000
(4,200,000)
4,200,000

5.31.05
5,100,000

48,340,000

53,440,000

(0)

830,000
54,270,000

Journal entries for 2004-2005 affecting stockholders' equity accounts:

1 Subscriptions receivable - PS (300,000 x P105)
Subscriptions receivable - CS (900,000 x P26)
Subscribed PS (300,000 x P100)
Subscribed CS (900,000 x P2.5)
APIC

31,500,000
23,400,000
30,000,000
2,250,000
22,650,000

Cash
16,470,000
Subscriptions receivable - PS (300,000 x P105 x 30%)
Subscriptions receivable - CS (900,000 x P26 x 30%)

9,450,000
7,020,000

2 Cash
37,338,000
Subscriptions receivable - PS (300,000 x P105 x 70%)
Subscriptions receivable - CS [(900,000-60,000) x P26 x 70%]

22,050,000
15,288,000

Subscribed PS (300,000 x P100)

Subscribed CS [(900,000-60,000) x P2.5]
Preferred stock
Common stock

30,000,000
2,100,000
30,000,000
2,100,000

Subscribed CS (60,000 x P2.5)

150,000
APIC [60,000 x (P26-P2.5)]
1,410,000
Subscriptions receivable - CS (60,000 x P26 x 70%)
Cash (60,000 x P26 x 30%)
3 Treasury stock
Cash (150,000 shares x P28)
4 Preferred stock
APIC [300,000 x (P105-P100)]
Common stock (300,000 x 4 x P2.5)
APIC
5 Machinery
Treasury stock
APIC

1,092,000
468,000

4,200,000
4,200,000
30,000,000
1,500,000
3,000,000
28,500,000
4,300,000
4,200,000
100,000

6 Memo entry.
7 Income summary
Retained earnings

830,000
830,000

PROBLEM NO. 5 - Stamina Farms

Requirement No. 1 - A
Capital stock (40,000 x P100)
Retained earnings:
Beginning
Net income for 2005
Total stockholders equity
Divide by number of shares outstanding
Book value per share

4,000,000
1,600,000
1,400,000
3,000,000
7,000,000
40,000
175

Requirement No. 2 - A
Value of the shares to be surrendered (6,000 x P175)
Amount of cash shortage
Amount to be paid to the treasurer

1,050,000
600,000
450,000

Requirement No. 3 - A
Retained earnings before dividends
Dividends to remaining stockholders (value of shares surrendered)
Retained earnings after dividends

3,000,000
(1,050,000)
1,950,000