ACTIVITY I Financial Assets @ Fair Value Problem 15-6 w/ changes

2019 Trading Securities 2,900,000 SEC 1 2,200,000

Commission Expense 40,000 SEC 2 700,000
Financial Asset @ FVOCI 3,640,000 2,900,000
Cash 6,540,000 SEC 3 1,620,000
SEC 4 2,020,000
Unrealized Loss - TS 500,000 3,640,000
Trading Securities 500,000 Current Assets
Trading Securities
Financial Asset @ FVOCI 360,000 Noncurrent Assets-LTI
Unrealized Gain - OCI 360,000 Financial Asset @ FVOCI
SHE-Reserves
2020 Cash 680,000 Unrealized Gain - OCI
Loss on Sale of Security A 20,000
Trading Securities 700,000

Cash 1,300,000
Financial Asset @ FVOCI 1,250,000
Gain on sale of Equity Securities 50,000

Unrealized Gain - OCI 240,000 SEC 1 700,000

Reatained Earnings 240,000 SEC 2 1,000,000
1,700,000
Trading Securities 200,000 SEC 3 1,500,000
Unrealized Gain - TS 200,000 SEC 4 1,250,000
2,750,000
Unrealized Loss - OCI 50,000 Current Assets
Financial Asset @ FVOCI 50,000 Trading Securities
Noncurrent Assets-LTI
Financial Asset @ FVOCI
SHE-Reserves
Net Cumulative Unrealiz
 ACTIVITY II INVESTMENT IN ASSOCIATE
1,400,000 800,000 2017
1,000,000 -300,000 Jan 1 Investment in Associate 4,500,000
2,400,000 500,000 Cash 4,500,000
1,500,000 120,000 To record acquisition
2,500,000 -480,000
4,000,000 -360,000 Dec 31 Investment in Associate 1,250,000
Investment Income 1,250,000
Trading Securities 2,400,000 To record share in net income of associate
rent Assets-LTI
Financial Asset @ FVOCI 4,000,000 Dec 31 Investment Income 50,000
Investment in Associate 50,000
Unrealized Gain - OCI 360,000 To amortize excess of cost attributable to building

Dec 31 Cash 500,000

2E+06 Investment in Associate 500,000
To record receipt of cash dividend from associate

ACTIVITY III INVESTMENT IN ASSOCIATE

2017
900,000 -200,000 Jan 1 Investment in Associate 3,500,000
1,000,000 0 Cash 3,500,000
1,900,000 -200,000 To record acquisition
1,600,000 -100,000
1,100,000 150,000 Dec 31 Investment in Associate 1,600,000
2,700,000 50,000 Investment Income 1,600,000
To record share in net income of associate
Trading Securities 1,900,000
rent Assets-LTI Dec 31 Investment Income 150,000
Financial Asset @ FVOCI 2,700,000 Investment in Associate 150,000
To amortize excess of cost attributable to equipment
Net Cumulative Unrealiz 70,000
Dec 31 Investment Income 200,000
Investment in Associate 200,000
To amortize excess of cost attributable to inventory

Dec 31 Investment in Associate 100,000

2E+06 Investment Income 100,000
To record the excess net fair value

Dec 31 Cash 400,000

1E+06 Investment in Associate 400,000
To record receipt of cash dividend from associate
 ACTIVITY IV ISSUANCE
Purchase Price 4,000,000
Transaction Costs 500,000 1 CASH
Total Acquisition Costs 4,500,000 Ordinary Shares
Carrying Amount of Net Assets Share Premium - OS
25% 15,000,000 3,750,000 Preference Sahres
Excess of Cost Over Carrying Amoun 750,000 Share Premium - OS
Undervalation of Building To record issuance for cash
10 25% 2,000,000 500,000
GOODWILL 250,000 2 LAND
Ordinary Shares
INCOME STATEMENT Share Premium - OS
Share in Net Income 5,000,000 1,250,000 Preference Sahres
Excess of Cost - BLD 500,000 -50,000 Share Premium - OS
INVESTMENT INCOME 1,200,000 To record issuance for land

SFP - NCA, separate line item 3 Bonds Payable

Investment in Associate 5,200,000 Accrued Interest Payable
Ordinary Shares
Purchase Price 3,500,000 Share Premium - OS
Transaction Costs Preference Sahres
Total Acquisition Costs 3,500,000 Share Premium - OS
Carrying Amount of Net Assets Discount on BP
40% 7,000,000 2,800,000 To record equity swap
Excess of Cost Over Carrying Amoun 700,000
Undervalation of Building
4 40% 1,500,000 600,000
Undervalation of Inventory
40% 500,000 200,000
EXCESS of Net FV over COST -100,000

INCOME STATEMENT
Share in Net Income 4,000,000 1,600,000
EXCESS of Net FV over COST 100,000
Excess of Cost - Eqpt 600,000 -150,000
Excess of Cost - INV (sold) -200,000
INVESTMENT INCOME 1,350,000

SFP - NCA, separate line item

Investment in Associate 4,450,000
 Problem 21-7 FV ALLOCATION
200 360 OS 10,000 3,600,000 3,200,000
8,000,000 200 270 PS 20,000 5,400,000 4,800,000
2,000,000 9,000,000 8,000,000
1,200,000
4,000,000 FV ALLOCATION
800,000 200 360 OS 10,000 3,600,000 3,400,000
ance for cash 200 270 PS 20,000 5,400,000 5,100,000
9,000,000 8,500,000
8,500,000
2,000,000 5 Interest Interest Discount
1,400,000 DATE Received Income Amortization
4,000,000 Feb 1, 2019 12% 15%
1,100,000 Feb 1, 2020 1,200,000 1,350,000 150,000
ance for land Feb 1, 2021 1,200,000 1,372,500 172,500
Feb 1, 2022 1,200,000 1,398,375 198,375
10,000,000 Feb 1, 2023 1,200,000 1,428,131 228,131
1,200,000 Feb 1, 2023 596,612 847,606 250,994
2,000,000
1,600,000
4,000,000
1,400,000
677,500 CARRYING AMOUNT 9,322,500
1,522,500 Accrued Interest Payable 1,200,000
Carrying Amount of Liability 10,522,500
FAIR VALUE OF SHARES 9,000,000
GAIN ON EXTINGUISHMENT OF DEBT 1,522,500
 PAR SP
2,000,000 1,200,000
4,000,000 800,000
8,000,000 8,000,000

PAR SP
2,000,000 1,400,000
4,000,000 1,100,000
8,000,000 8,000,000

Carrying
Amount ###
9,000,000 0.49718
9,150,000 0.500
9,322,500
9,520,875
9,749,006
10,000,000
4971767 4022586 8994353
1200000 3.352155
3.333333 5000000 4000000 2E+13
 Problem 20-1 OCEAN COMPANY Problem 20-1
PAR 2020 MEMO The entity was authorized to issue 100,000 shares of P50 OCEA
50 par value. SHAREHOLDERS' EQUITY
SHARES A Ordinary Shares
100,000 Subscribed Ordinary Share
25% 1 Subscriptions Receivable 1,250,000 Less:
25,000 Subcribed Share Capital 1,250,000 Share Premium - Ordinary
To record original subscription Total Shareholders' Equity

25% 2 Cash 312,500

Subscriptions Receivable 312,500
To record paid-in capital

15,000 3 Cash 562,500

750000 Subscriptions Receivable 562,500
To record full payment on 15,000 shares

Subcribed Share Capital 750,000 Problem 20-2

Ordinary Shares 750,000 LAK
To record issuance of 15,000 shares SHAREHOLDERS' EQUITY
Authorized Share Capital
10,000 4 Land 600,000 Less:
Ordinary Shares 500,000 Issued Share Capital
Share Premium - OS 100,000 Subscribed Share Capital
To record acquisition @ FV Less:
Share Premium - Ordinary
5,000 5 Cash 300,000 Total Shareholders' Equity
60 Ordinary Shares 250,000
Share Premium - OS 50,000
To record issuance for cash

2,000 6 Legal Expenses 100,000

Ordinary Shares 100,000
To record issuance as payment

Problem 20-4 BROOK COMPANY BROO

PAR 2020 MEMO The entity was authorized to issue share capital as follows SHAREHOLDERS' EQUITY
1 100 PS 100 Par 300,000 shares Share Capital
50 OS 50 par 100,000 shares Ordinary Shares
Subscribed Ordinary Share
60 Less:
40,000 2 Cash 2,400,000 Preference Shares
Ordinary Shares 2,000,000
Share Premium-OS 400,000 Share Premium
 To record issuance for cash Share Premium-OS
Share Premium-PS
120 3 Cash 1,200,000 Retained Earnings
10,000 Preference Shares 1,000,000 Total Shareholders' Equity
Share Premium-PS 200,000
To record issuance for cash

10,000 4 Subscriptions Receivable - PS 1,000,000

0 Subscribed Preference Shares 1,000,000
To record subscription

5 Cash 400,000
Subscriptions Receivable - PS 400,000
To record collection on subscription

1,000 6 Legal Expenses 100,000

Preference Shares 100,000
To record issuance as payment
roblem 20-1 Problem 20-2
OCEAN COMPANY PAR 2020
HAREHOLDERS' EQUITY 100 Unissued Share Capital
Ordinary Shares 1,600,000 SHARES A Authorized Share Capital
Subscribed Ordinary Shares 500,000 50,000
Subscriptions Receivable 375,000 125,000 40%
Share Premium - Ordinary Shares 150,000 20,000 1 Subscriptions Receivable
otal Shareholders' Equity 1,875,000 Subcribed Share Capital

25% 2 Cash
Subscriptions Receivable

10,000 3 Cash
1000000 Subscriptions Receivable

roblem 20-2
LAKE COMPANY Subcribed Share Capital
HAREHOLDERS' EQUITY Unissued Share Capital
Authorized Share Capital 5,000,000
Unissued Share Capital 2,000,000
Issued Share Capital 3,000,000 5,000 4 Patent
Subscribed Share Capital 1,000,000 Unissued Share Capital
Subscriptions Receivable 750,000 250,000
Share Premium - Ordinary Shares 300,000
otal Shareholders' Equity 3,550,000 15,000 5 Cash
120 Unissued Share Capital
Share Premium - OS

BROOK COMPANY Problem 20-4

HAREHOLDERS' EQUITY 2020
hare Capital 20,000 7 Property, Plant & Equipment
Ordinary Shares 3,000,000 Ordinary Shares
Subscribed Ordinary Shares 750,000 Share Premium - OS
Subscriptions Receivable-OS 450,000 300,000
Preference Shares 2,100,000
5,400,000 15,000 8 Subscriptions Receivable - OS
hare Premium 0 Subscribed Ordinary Shares
 Share Premium-OS 700,000
Share Premium-PS 200,000 900,000
etained Earnings 2,000,000 40% 9 Cash
otal Shareholders' Equity 8,300,000 Subscriptions Receivable - OS

10 Cash
Subscriptions Receivable - PS

Subscribed Preference Shares

Preference Shares

11 Income Summary
Retained Earnings
 LAKE COMPANY Problem 20-6
100 1 Subscription Receivable - PS
nissued Share Capital 5,000,000 20,000 Subscribed Preference Shares
Authorized Share Capital 5,000,000 To record subscription of 20,000 PS
To record authorization
120 2 Subscriptions Receivable - PS
ubscriptions Receivable 2,000,000 4,000 Subscribed Preference Shares
Subcribed Share Capital 2,000,000 Share Premium - PS
To record original subscription To record subscription of 4,000 PS

500,000 3 Cash
Subscriptions Receivable 500,000 Subscriptions Receivable - PS
To record paid-in capital To record collection on subscription

750,000 Subscribed Preference Shares

Subscriptions Receivable 750,000 Preference Shares
To record full payment on 10,000 shares To record issuance upon full payment

ubcribed Share Capital 1,000,000 30 1 Subscription Receivable - OS

Unissued Share Capital 1,000,000 40,000 Subscribed Ordinary Shares
To record issuance of 10,000 shares Share Premium - OS
To record subscription of 20,000 PS
500,000
Unissued Share Capital 500,000 10 2 Land
To record acquisition @ par 8,000 Ordinary Shares
Share Premium - OS
1,800,000 To record issuance of 8,000 OS
Unissued Share Capital 1,500,000
Share Premium - OS 300,000 3 Cash
To record issuance for cash Subscription Receivable - OS
To record collection on subscription

Subscribed Ordinary Shares

Ordinary Shares
To record issuance upon full payment

Problem 20-8 SAND COMPANY

1 CONVERTIBLE PREFERENCE SHARE
BROOK COMPANY 100 a Preference Shares
5,000 Share Premium-PS
roperty, Plant & Equipment 1,300,000 50 Ordinary Shares
Ordinary Shares 1,000,000 Share Premium-OS
Share Premium - OS 300,000 To record conversion of 1 PS to 1 OS
To record issuance for acquisition
4 b Preference Shares
ubscriptions Receivable - OS 750,000 20,000 Share Premium-PS
Subscribed Ordinary Shares 750,000 Retained Earnings
 To record subscription Ordinary Shares
To record conversion of 1 PS to 4 OS
300,000
Subscriptions Receivable - OS 300,000 2 CALLABLE PREFERENCE SHARE
To record collection on subscription 120 a Preference Shares
5,000 Share Premium-PS
600,000 Retained Earnings
Subscriptions Receivable - PS 600,000 Cash
To record collection on subscription To record preference shares called in a

ubscribed Preference Shares 1,000,000 80 b Preference Shares

Preference Shares 1,000,000 5,000 Share Premium-PS
To record issuance upon full payment Cash
Share Premium-OS
come Summary 2,000,000 To record conversion of 1 PS to 1 OS
Retained Earnings 2,000,000
To close profit for the year Problem 20-9 LILIANNE COMPANY
2020
1-Jan Cash
Redeemable Preference share
To record issuance

10% 31-Dec Interest Expense

Interest Payable
To record accrued interest
2021
31-Dec Interest Expense
Interest Payable
To record accrued interest
2021
1-Jan Redeemable Preference share
Interest Payable
Cash
To record redemption
eivable - PS 2,000,000
d Preference Shares 2,000,000
record subscription of 20,000 PS

ceivable - PS 480,000
d Preference Shares 400,000
80,000
record subscription of 4,000 PS

2,360,000
ons Receivable - PS 2,360,000
record collection on subscription

rence Shares 2,200,000

2,200,000
record issuance upon full payment

eivable - OS 1,200,000 Share Premium - OS 950,000

d Ordinary Shares 400,000 Less: SP - OS from issuance for land
800,000 SP - OS from subscription of 40,000 shares
record subscription of 20,000 PS Par Value of 10 40,000 shares
Subscription Receivable
230,000 Divide by # of shares
80,000 ISSUE PRICE
150,000
record issuance of 8,000 OS CONTRIBUTED CAPITAL
Ordinary
840,000 Share Capital 2,200,000
on Receivable - OS 840,000 Share Premium 80,000
record collection on subscription Subscribed 200,000
Subscription Receivable (120,000)
160,000 CONTRIBUTED CAPITAL 2,360,000
160,000
record issuance upon full payment

SAND COMPANY
REFERENCE SHARE
500,000
50,000
250,000
300,000
record conversion of 1 PS to 1 OS

500,000
50,000
450,000
 1,000,000
record conversion of 1 PS to 4 OS

RENCE SHARE
500,000
50,000
50,000
600,000
record preference shares called in at 120

500,000
50,000
400,000
150,000
record conversion of 1 PS to 1 OS

LILIANNE COMPANY

5,000,000
ble Preference share 5,000,000
record issuance

500,000
500,000
record accrued interest

550,000
550,000
record accrued interest

ference share 5,000,000

1,050,000
6,050,000
record redemption
 950,000
150,000
800,000
400,000
1,200,000
40,000
30

CONTRIBUTED CAPITAL
Preference
240,000
950,000
240,000
(360,000)
1,070,000
 Problem 20-3 BUMP COMPANY
2020 The entity was authorized to issue share capital as follows
1-Jan 100 OS 100 Par 50,000 shares

1-Jan Subscriptions Receivable - OS 4,000,000

40,000 Subscribed Ordinary Shares 4,000,000
To record subscription

2 Accounts Receivable 350,000

12,000 Notes Receivable 70,000
Inventory 680,000
Accounts Payable 100,000
Subscriptions Receivable - OS 1,000,000 Problem 20-5
To record partial payment from A (200,000)
SHAREHOLDERS' EQUITY
3 Land 150,000 Authorized Share C
13,000 Building 850,000 Less:
Subscriptions Receivable - OS 1,000,000 Issued Share Capita
To record partial payment from B (300,000) Subscribed Share C
Less:
4 Cash 375,000 Share Premium - O
15,000 Subscriptions Receivable - OS 375,000 Retained Earnings
To record payment of 25% subcription from C, D, E Total Shareholders' Equit

5 Legal Expenses 50,000

500 Ordinary Shares 50,000 Problem 20-3
To record issuance of shares as payment
SHAREHOLDERS' EQUITY
40 6 Cash 40,000 Ordinary Shares
120 Subscriptions Receivable - OS 80,000 Subscribed Ordinar
1,000 Subscribed Ordinary Shares 100,000 Less:
Share Premium-OS 20,000 Share Premium - O
To record subscription of F Total Shareholders' Equit

7 Cash 1,100,000 Subscribed Ordinary Shar

Subscriptions Receivable - OS 1,100,000 Ordinary Shares
To record full payment on subcription from C, D, E

Problem 20-7 FULLHOUSE COMPANY

1-Jan The entity was authorized to issue share capital as follows SHAREHOLDERS' EQUITY
100 OS 100 Par 100,000 shares Share Capital
100 Con - PS 100 Par 50,000 shares Ordinary Shares
Subscribed Ordinar
Less:
1-Jan Land 2,500,000 Preference Shares
10,000 Promoters' Fees 500,000
 Ordinary Shares 1,000,000 Share Premium
Share Premium-OS 2,000,000 Share Premium-OS
To record issuance for cash Share Premium-PS
Retained Earnings
120 20-Feb Cash 1,800,000 Total Shareholders' Equit
15,000 Preference Shares 1,500,000
Share Premium-PS 300,000
To record issuance for cash

20-Feb Share Premium-PS 50,000

Cash 50,000
To record payment to an agent

25,000 10-Mar Cash 6,500,000

260 Ordinary Shares 2,500,000
Share Premium-OS 4,000,000
To record issuance for cash

20-Feb Share Premium-OS 200,000

Cash 200,000
To record payment for share issue costs

20,000 1-Apr Subscriptions Receivable - OS 7,000,000

350 Subscribed Ordinary Shares 2,000,000
Share Premium-OS 5,000,000
To record subscription

Share Premium - OS 950,000 950,000

Less: SP - OS from issuance for land 150,000
SP - OS from subscription of 40,000 shares 800,000
Par Value of 10 40,000 shares 400,000
Subscription Receivable 1,200,000
Divide by # of shares 40,000
ISSUE PRICE 30

CONTRIBUTED CAPITAL
 Ordinary Preference
Share Capital 2,200,000 240,000
Share Premium 80,000 950,000
Subscribed 200,000 240,000
Subscription Receivable (120,000) (360,000)
CONTRIBUTED CAPITAL 2,360,000 1,070,000
 Problem 20-5
PAR 2020 100
100 Unissued Share Capital
SHARES A Authorized Share Capital
100,000
25%
25,000 1 Subscriptions Receivable
Subcribed Share Capital

25% 2 Cash
Subscriptions Receivable
roblem 20-5
LAGOON COMPANY
HAREHOLDERS' EQUITY 10,000 3 Cash
Authorized Share Capital 10,000,000 1000000 Subscriptions Receivable
Unissued Share Capital 5,000,000
Issued Share Capital 5,000,000
Subscribed Share Capital 1,500,000 Subcribed Share Capital
Subscriptions Receivable 1,125,000 375,000 Unissued Share Capital
Share Premium - Ordinary Shares 600,000
Retained Earnings 3,000,000
otal Shareholders' Equity 8,975,000 30,000 4 Land
Building
Unissued Share Capital
roblem 20-3 Share Premium - OS
BUMP COMPANY
HAREHOLDERS' EQUITY
Ordinary Shares 100.00 33,500 3,350,000 10,000 5 Bank Loan Payable
Subscribed Ordinary Shares 800,000 Interest Expense
Subscriptions Receivable 605,000 195,000 Unissued Share Capital
Share Premium - Ordinary Shares 20,000 Share Premium - OS
otal Shareholders' Equity 3,565,000

ubscribed Ordinary Shares 3,300,000 6 Income Summary

Ordinary Shares 3,300,000 Retained Earnings
To record issuance

FULLHOUSE COMPANY Problem 20-7

HAREHOLDERS' EQUITY 2020
hare Capital 32,000 15-Jul Building
Ordinary Shares 100.00 67,000 6,700,000 12,000 Ordinary Shares
Subscribed Ordinary Shares 500,000 2,625,000 Share Premium - OS
Subscriptions Receivable-OS 1,000,000 (500,000) 20,000 Preference Shares
Preference Shares 100.00 35,000 3,500,000 4375000 Share Premium-PS
9,700,000
hare Premium
Share Premium-OS 13,225,000 10,000 15-Jul Cash
Share Premium-PS 2,625,000 15,850,000 Ordinary Shares
etained Earnings 3,000,000 Share Premium-OS
otal Shareholders' Equity 28,550,000

1-Aug Cash
Subscriptions Receivable - OS

10,000 1-Aug Subscribed Ordinary Shares

Ordinary Shares

5,000 1-Aug Subscribed Ordinary Shares

Share Premium-OS
Subscriptions Receivable - OS

31-Dec Income Summary

Retained Earnings
 LAGOON COMPANY
PAR 100,000 shares
nissued Share Capital 10,000,000
Authorized Share Capital 10,000,000
To record authorization

ubscriptions Receivable 2,500,000

Subcribed Share Capital 2,500,000
To record original subscription

625,000
Subscriptions Receivable 625,000
To record paid-in capital

750,000
Subscriptions Receivable 750,000
To record full payment on 10,000 shares

ubcribed Share Capital 1,000,000

Unissued Share Capital 1,000,000
To record issuance of 10,000 shares

800,000
2,500,000
Unissued Share Capital 3,000,000
Share Premium - OS 300,000
To record acquisition @ par

ank Loan Payable 1,100,000

terest Expense 200,000
Unissued Share Capital 1,000,000
Share Premium - OS 300,000
To record issuance for cash

come Summary 3,000,000

Retained Earnings 3,000,000
To close profit for the year

FULLHOUSE COMPANY

7,000,000
Ordinary Shares 1,200,000
Share Premium - OS 1,425,000
Preference Shares 2,000,000
Share Premium-PS 2,375,000
To record issuance for acquisition
 3,000,000
Ordinary Shares 1,000,000
Share Premium-OS 2,000,000
To record issuance for cash

4,500,000
Subscriptions Receivable - OS 4,500,000
To record collection

ubscribed Ordinary Shares 1,000,000

Ordinary Shares 1,000,000
To record issuance on full payment

ubscribed Ordinary Shares 500,000

hare Premium-OS 1,000,000
Subscriptions Receivable - OS 1,500,000
To record forfeited subscription of 5,000 shares

come Summary 3,000,000

Retained Earnings 3,000,000
To close profit for the year
Problem 21-1 AROMA COMPANY
2020
5,000 a Treasury Shares 800,000
160 Cash 800,000
To record purchase of treasury shares

b Cash 1,000,000
Treasury Shares 800,000
Share Premium - TS 200,000
To record reissue of above cost

c Cash 700,000
Retained Earnings 100,000
Treasury Shares 800,000
To record reissue of below cost
TREASURY SHARES @ COST
100 2 Ordinary Shares 500,000 100 Ordinary Shares @ PAR
Share Premium-OS 20,000 Excess of PAR
Retained Earnings 280,000 104 Share Premium from original iss
Treasury Shares 800,000
To record retirement Allocated to Retained Earnings

Problem 21-2 ALEGRO COMPANY

15 2020
200,000 Jan 1 Cash 4,000,000
20 Ordinary Shares 3,000,000
Share Premium-OS 1,000,000
To record issuance for cash

250,000 Jan 1 Cash 6,250,000

25 Ordinary Shares 3,750,000
Share Premium-OS 2,500,000
To record issuance for cash

50,000 a Treasury Shares 1,000,000

20 Cash 1,000,000
To record purchase of treasury shares

25 b Cash 1,250,000
Treasury Shares 1,000,000
Share Premium - TS 250,000
To record reissue of above cost

Problem 21-2 ALEGRO COMPANY

 20 2020
200,000 Jan 1 Cash 4,000,000
20 Ordinary Shares 4,000,000
To record issuance for cash

250,000 Jan 1 Cash 6,250,000

25 Ordinary Shares 5,000,000
Share Premium-OS 1,250,000
To record issuance for cash

50,000 a Treasury Shares 1,000,000

20 Cash 1,000,000
To record purchase of treasury shares

25 b Cash 1,250,000
Treasury Shares 1,000,000
Share Premium - TS 250,000
To record reissue of above cost

Problem 21-4 DIVINA COMPANY

150 PAR SHARE CAPITAL 3,000,000 20,000
SHARE PREMIUM 200,000 SHARES
RETAINED EARNINGS 1,500,000

a 2 Shares of NO PAR 40,000

50 Stated Value SHARES

Share Capital 3,000,000

Share Premium 200,000
Share Capital (no par) 2,000,000
Share Premium - Recapitalization 1,200,000
To record recapitalization
To record recapitalization

b Share Split 5 shares 100,000

30 PAR SHARES

MEMO Issued 100,000 new shares with par value of P30, as a

result of 5 for 1 split of 20,000 old shares with par
value of P150.

c 1 share 20,000 SHARES

100 par value
 Share Capital 1,000,000
Share Premium - Recapitalization 1,000,000
To record recapitalization

d 4 shares 80,000 SHARES

50 par value

Share Capital 3,000,000

Share Premium 200,000
Retained Earnings 800,000
Share Capital 4,000,000
To record recapitalization
 ASURY SHARES @ COST 800,000
dinary Shares @ PAR 500,000
300,000
re Premium from original issuance
(104-100) * 5,000 shar 20,000
ocated to Retained Earnings 280,000
NO Share Premium - TS
 Problem 21-3 HONDA COMPANY HON
100 2020 SHAREHOLDERS' EQUITY
140 a Cash 4,200,000 Share Capital
30,000 12% Preference Shares 3,000,000 Ordinary Shares
Share Premium-PS 1,200,000 12% Preference Shares
To record issuance for cash
Share Premium
50 b Cash 5,500,000 Share Premium-OS
55 Ordinary Shares 5,000,000 Share Premium-PS
100,000 Share Premium-OS 500,000 Share Premium-TS
To record issuance for cash Share Premium-DC
Retained Earnings
120 c Preference Shares 1,000,000 Unappropriated
10,000 Share Premium-PS 200,000 Appropriated
Cash 1,200,000 TOTAL
To record retirement of 10,000 PS LESS: Treasury Shares, 5,000 @ C
Total Shareholders' Equity
52 d Tresury Shares - Ordinary 780,000
15,000 Cash 780,000
To record purchase of 15,000 TS-ordinary

60 e Cash 600,000
10,000 Tresury Shares - Ordinary 520,000
Share Premium - TS 80,000
To record sale of 10,000 TS-ordinary
HON
20,000 f MEMO Received 20,000 ordinary shares as donation. SHAREH
SHARE CAPITAL
10,000 Cash 650,000 RESERVES
65 Share Premium - DC 650,000 RETAINED EARNINGS
To record sale of 10,000 shares TOTAL
LESS: TREASURY SHARES 5,000 s
g Income Summary 3,000,000 SHAREHOLDERS' EQUITY
Retained Earnings 3,000,000
To close profit for the year NOTE 1
40% Ordinary Shares
h Retained Earnings 260,000 12% Preference Shares
Appropriated Retained Earnings 260,000 TOTAL
To record collection on subscription
NOTE 2
Share Premium-OS
Share Premium-PS
Share Premium-TS
Share Premium-DC
RE Appropriated for Treasu
TOTAL
 Problem 21-5 TOYOTA COMPANY 12% 100 Preference Share
2020 50 Ordinary Share
50 1 Cash 1,000,000 Share Premium-OS
50 Ordinary Shares 1,000,000 Share Premium-PS
20,000 To record issuance for cash Retained Earnings
TOYO
60 2 Tresury Shares - Ordinary 300,000 SHAREHOLDERS' EQUITY
5,000 Cash 300,000 Share Capital
To record purchase of 15,000 TS-ordinary Ordinary Shares
12% Preference Shares

3 MEMO 2for1 Issued Shares 140,000 Share Premium

Outstanding Shares 130,000 Share Premium-OS
25 PAR Share Premium-PS
Share Premium-DC
4 Cash 120,000 Retained Earnings
3,000 Retained Earnings 60,000 Appropriated Retained Earnings
Tresury Shares - Ordinary 180,000 TOTAL
To record reissuance for cash LESS: Treasury Shares, 5,000 @ C
Total Shareholders' Equity

15,000 4 MEMO Received 15,000 ordinary shares as donation.

10,000 Cash 400,000

40 Share Premium - DC 400,000
To record sale of 10,000 shares

6 Income Summary 500,000

Retained Earnings 500,000 TOYO
To close profit for the year SHAREH
SHARE CAPITAL
7 Retained Earnings 120,000 RESERVES
Appropriated Retained Earnings 120,000 RETAINED EARNINGS
To record collection on subscription TOTAL
LESS: TREASURY SHARES 5,000 s
SHAREHOLDERS' EQUITY

NOTE 1
Ordinary Shares
12% Preference Shares
TOTAL

NOTE 2
Share Premium-OS
Share Premium-PS
Share Premium-DC
RE Appropriated for Treasu
TOTAL
 HONDA COMPANY
HAREHOLDERS' EQUITY
hare Capital
Ordinary Shares 50.00 100,000 5,000,000
Preference Shares 100.00 20,000 2,000,000
7,000,000
hare Premium
Share Premium-OS 500,000
Share Premium-PS 1,000,000
Share Premium-TS 80,000
Share Premium-DC 650,000 2,230,000
etained Earnings
Unappropriated 2,740,000
Appropriated 260,000 3,000,000
12,230,000
Treasury Shares, 5,000 @ Cost 260,000
otal Shareholders' Equity 11,970,000

ORDINARY PREFERENCE
ISSUED 100,000 20,000
TREASURY 5,000
DONATED 10,000
OUTSTANDING 85,000 20,000

HONDA COMPANY
SHAREHOLDERS' EQUITY
HARE CAPITAL (1) 7,000,000
(2) 2,490,000
ETAINED EARNINGS 2,740,000
12,230,000
TREASURY SHARES 5,000 shares @ P52 260,000
HAREHOLDERS' EQUITY 11,970,000

SHARE CAPITAL
Ordinary Shares 50.00 100,000 5,000,000
Preference Shares 100.00 20,000 2,000,000
7,000,000

RESERVES
Share Premium-OS 500,000
Share Premium-PS 1,000,000
Share Premium-TS 80,000
Share Premium-DC 650,000
RE Appropriated for Treasury Shares 260,000
2,490,000
 Preference Share 5,000 500,000 Problem 21-6
Ordinary Share 50,000 2,500,000 10%
Share Premium-OS 500,000 100 a Ordinary Shares
Share Premium-PS 200,000 5,000 Share Premium-DC
Retained Earnings 2,000,000
TOYOTA COMPANY
HAREHOLDERS' EQUITY 50 b Ordinary Shares
hare Capital 50,000 Share Premium-Recapitalizati
Ordinary Shares 50.00 70,000 3,500,000
Preference Shares 100.00 5,000 500,000
4,000,000 c Share Capital
hare Premium 55 Share Premium
Share Premium-OS 500,000 100,000 Share Capital (no par)
Share Premium-PS 200,000 Share Premium - Recapitalizati
Share Premium-DC 400,000 1,100,000
etained Earnings 2,320,000
ppropriated Retained Earnings 120,000 2,440,000 20 d Share Capital
7,540,000 150,000 Share Premium
Treasury Shares, 5,000 @ Cost 120,000 Share Capital (no par)
otal Shareholders' Equity 7,420,000 Share Premium - Recapitalizati

ORDINARY PREFERENCE
ISSUED 70,000 5,000
TREASURY 2,000
DONATED 5,000
OUTSTANDING 63,000 5,000

TOYOTA COMPANY
SHAREHOLDERS' EQUITY
HARE CAPITAL (1) 4,000,000
 (2) 1,220,000
ETAINED EARNINGS 2,320,000
7,540,000
TREASURY SHARES 5,000 shares @ P52 120,000
HAREHOLDERS' EQUITY 7,420,000

SHARE CAPITAL
Ordinary Shares 50.00 70,000 3,500,000
Preference Shares 100.00 5,000 500,000
4,000,000

RESERVES
Share Premium-OS 500,000
Share Premium-PS 200,000
Share Premium-DC 400,000
RE Appropriated for Treasury Shares 120,000
1,220,000
0
 LANCER COMPANY

rdinary Shares 500,000

Share Premium-DC 500,000
To retired 5,000 shares

rdinary Shares 2,500,000

Share Premium-Recapitalization 2,500,000
To reduce par value to P50

hare Capital 5,000,000

hare Premium 1,000,000
Share Capital (no par) 5,500,000
Share Premium - Recapitalization 500,000
To record recapitalization

hare Capital 5,000,000

hare Premium 1,000,000
Share Capital (no par) 3,000,000
Share Premium - Recapitalization 3,000,000
To record recapitalization
PROBLEM 21-7 MARIANNE COMPANY
1 a MEMO Issued 25,000 rights , 1 rights on each share,
permitting holders to acquire 1 ordinary share of
P50 par value at P60 with every 5 rights submitted.
5,000 shares can be issue if all rights were exercised.
20000
4000 b CASH 240,000
60 Ordinary Share Capital 200,000
50 Share Premium - OS 40,000
To record issuance of 4,000 shares thru
the exercise of 20,000 rights

MEMO 1,000 shares can be issue for the exercise

remaining 5,000 rights.

c MEMO The 5,000 rights expired.

2 a CASH 2,500,000 Issue Price

20000 Preference Share Capital 2,000,000 Less: Market Value of Warrants
100 Share Premium - PS 300,000 Number of Warrants
Share Warrants Outstanding 200,000 MV per Warrant
To record issuance of 20,000 preference shares Preference Shares Ex-Warrant
with warrants to acquire ordinary shares 2:1 100 Preference Shares @ par
Share Premium - PS
18000
9000 b CASH 540,000
60 Share Warrants Outstanding 180,000
50 Ordinary Share Capital 450,000
Share Premium 270,000
To record issuance of 9,000 ordinary shares
thru the exercise of 18,000 warrants
2000
c Share Warrants Outstanding 20,000
Share Premium - OS 20,000
To record the expiration of 2,000 warrants

3 a CASH 6,000,000 Issue Price

50000 Preference Share Capital 5,000,000 Less: Market Value of Warrants
Share Premium - PS 500,000 MV of Ordinary Shares
Share Warrants Outstanding 500,000 Less: Option Price / share
To record issuance of 50,000 preference shares Intrinsic Value of Warrant
with warrants to acquire ordinary shares 2:1 # of OS under Warrants
50000 Preference Shares Ex-Warrant
 25000 b CASH 1,500,000 100 Preference Shares @ par
60 Share Warrants Outstanding 500,000 Share Premium - PS
50 Ordinary Share Capital 1,250,000
Share Premium 750,000
To record issuance of 25,000 ordinary shares
thru the exercise of 50,000 warrants

PROBLEM 21-8 GLORIOUS COMPANY

2020 Issue Price
a Cash 6,000,000 LESS: MV of Bonds Ex Warrant
Bonds Payable 5,000,000 Share Warrants Outstanding
Premium on BP 250,000
Share Warrants Outstanding 750,000 MV of Bonds Ex Warrant
To record sale of 5,000 bonds w/ warrants LESS: Face Amount of Bonds
Premium on Bonds Payable

Dec 31 Cash 1,200,000 ISSUE PRICE price/share

Share Warrants Outstanding 500,000 # of shares issued
Ordinary Share Capital 1,000,000 Share Warrants Outstanding
Share Premium - OS 700,000 total shares to be issue
To record exercise of warrants to acquire TOTAL CONSIDERATION
10,000 ordinary shares Ordinary Share
Share Premium
Dec 31 Income Summary 2,000,000
Retained Earnings 2,000,000
To close income summary GLORIOUS COMPAN
2021 SHAREHOLDERS' EQUITY
May 31 Share Warrants Outstanding 250,000 Ordinary Share Capital, P100 par; 200,
Share Premium - SW 250,000 authorized, 72,000 shares issue
To record expiration of warrants outstanding
Share Premium
Retained Earnings
Jul 15 MEMO Issued 60,000 rights , 1 rights on each share, TOTAL SHAREHOLDERS' EQUITY
permitting holders to acquire 1 share at P130 with
every 5 rights submitted. 12,000 shares can be issue
if all rights were exercised.

12000 Dec 31 CASH 1,560,000

130 Ordinary Share Capital 1,200,000
100 Share Premium - OS 360,000
To record issuance of 4,000 shares thru
the exercise of 20,000 rights

Dec 31 Income Summary 3,000,000

Retained Earnings 3,000,000
To close income summary
 2,500,000
ket Value of Warrants
mber of Warrants 20,000
per Warrant 10 200,000
e Shares Ex-Warrant 2,300,000
e Shares @ par 20,000 2,000,000
300,000

6,000,000
ket Value of Warrants
of Ordinary Shares 80
s: Option Price / share 60
insic Value of Warrant 20
f OS under Warrants 25,000 500,000
e Shares Ex-Warrant 5,500,000
e Shares @ par 50,000 5,000,000
500,000

120 5,000,000 6,000,000

of Bonds Ex Warrant 105 5,250,000
rrants Outstanding 750,000

nds Ex Warrant 5,250,000

e Amount of Bonds 5,000,000
on Bonds Payable 250,000

price/share 120
# of shares issued 10,000 1,200,000
rrants Outstanding
al shares to be issue 15,000 500,000
NSIDERATION 1,700,000
100 1,000,000
700,000

GLORIOUS COMPANY
LDERS' EQUITY
Share Capital, P100 par; 200,000 shares
horized, 72,000 shares issued &
7,200,000
2,310,000
8,000,000
AREHOLDERS' EQUITY 17,510,000
 PROBLEM 22-1 ZEBRA COMPANY
45000 Dec 31 Retained Earnings 1,350,000
30 Cash Dividend Payable 1,350,000
To record dividend declaration
2021
Jan 15 NO ENTRY

Jan 31 Cash Dividend Payable 1,350,000

Cash 1,350,000
To record payment of dividend

PROBLEM 22-2 CANDEL COMPANY

10000 Óct 31 Retained Earnings 1,300,000 Dividend Payable - Dec 31
130 Property Dividend Payable 1,300,000 Dividend Payable - Oct 31
To record dividend declaration Increase in quoted price
Multiply by # shares (equity sec
Dec 31 Retained Earnings 200,000 Increase in div payable
Property Dividend Payable 200,000
To record increase in quoted price
2021
Mar 31 Property Dividend Payable 400,000 Dividend Payable - Dec 31
Retained Earnings 400,000 Dividend Payable - Mar 31
To record decrease in quoted price Decrease in quoted price
Multiply by # shares (equity sec
10000 Mar 31 Property Dividend Payable 1,100,000 Decrease in div payable
90 Investment in Equity Securities 900,000
Gain on distribution of property dividend 200,000
To record distribution of dividend

PROBLEM 22-3 LEILANIE COMPANY

50000 Mar 1 Treasury Shares 500,000
10 Cash 500,000
To record acquisition of 50,000 own shares @ P10 Dividend Payable - Dec 31
Dividend Payable - Oct 31
Jul 1 Retained Earnings 1,500,000 Increase in div payable
Property Dividend Payable 1,500,000
To record dividend declaration Dividend Payable - Mar 1
Dividend Payable - Dec 31
Dec 31 Retained Earnings 300,000 Increase in div payable
Property Dividend Payable 300,000
To record increase in fair value LEILAN
SHAREHO
Dec 31 Income Summary 3,000,000 SHARE CAPITAL
Retained Earnings 3,000,000 RESERVES
 To record profit for 2020 RETAINED EARNINGS
TOTAL
Dec 31 Retained Earnings 500,000 LESS:
Retained Earnings appropriated for TS 500,000 SHAREHOLDERS' EQUITY
To record profit for 2020
2021 NOTE 1
Mar 31 Retained Earnings 200,000
Property Dividend Payable 200,000
To record increase in fair value

Mar 31 Property Dividend Payable 2,000,000 NOTE 2

Inventory 1,200,000
Gain on distribution of property dividend 800,000
To record distribution of dividend TOTAL

PROBLEM 22-4 GREECE COMPANY

Oct 1 Retained Earnings 3,800,000 Dividend Payable - Oct 1
Property Dividend Payable 3,800,000 Dividend Payable - Dec 31
To record dividend declaration Decrease in div payable

Dec 31 Property Dividend Payable 100,000 Machinery - CA

Retained Earnings 100,000 Machinery - FV
To record increase in fair value IMPAIRMENT LOSS

Dec 31 Impairment Loss 300,000

Machinery Dividend Payable - Dec 31
To record impairment loss Dividend Payable - Apr 1
2021 Decrease in div payable
Apr 1 Property Dividend Payable 200,000
Retained Earnings 200,000
To record increase in fair value

Apr 1 Property Dividend Payable 3,500,000

Loss on distribution of property dividend 200,000
Machinery 3,700,000
To record distribution of dividend
 PROBLEM 22-5
Dec 31 Retained Earnings
Capital Liquidated
Cash Dividend Payable

(2) Cash Dividend Payable

Cash

Dividend Payable - Dec 31 150

Dividend Payable - Oct 31 130
Increase in quoted price 20 PROBLEM 32-4
Multiply by # shares (equity sec) 10,000 Dec 31 Retained Earnings
Increase in div payable 200,000 Capital Liquidated
Cash Dividend Payable

Dividend Payable - Dec 31 150 (2) Cash Dividend Payable

Dividend Payable - Mar 31 110 Cash
Decrease in quoted price 40
Multiply by # shares (equity sec) 10,000
Decrease in div payable 400,000
PROBLEM 22-6
1 Dec 31 Retained Earnings
Dividend Payable

Jul 1 Dividend Payable

Cash
Dividend Payable - Dec 31 1,800,000 Retained Earnings
Dividend Payable - Oct 31 1,500,000
Increase in div payable 300,000
2 Dec 31 Retained Earnings
Dividend Payable - Mar 1 2,000,000 Dividend Payable
Dividend Payable - Dec 31 1,800,000
Increase in div payable 200,000
Jul 1 Retained Earnings
LEILANIE COMPANY Dividend Payable
SHAREHOLDERS' EQUITY
SHARE CAPITAL (1) 1,500,000
RESERVES (2) 3,500,000 Jul 1 Dividend Payable
RETAINED EARNINGS 5,700,000 Car Fleet
TOTAL 10,700,000 Gain on distribution of property
TREASURY SHARES 5,000 shares @ P52 500,000
SHAREHOLDERS' EQUITY 10,200,000
PROBLEM 22-7
NOTE 1 SHARE CAPITAL 1 (1) Retained Earnings
Ordinary Shares 5.00 300,000 1,500,000 Share Dividend Payable
400,000 shares authorized, 300,000 shares
issued & outstanding
(2) Share Dividend Payable
NOTE 2 RESERVES Ordinary Shares
Share Premium 3,000,000
RE Appropriated for Treasury Shares 500,000
TOTAL 3,500,000 2 (1) Retained Earnings
Share Dividend Payable
Share Premium

Dividend Payable - Oct 1 3,800,000

Dividend Payable - Dec 31 3,700,000 (2) Share Dividend Payable
Decrease in div payable 100,000 Ordinary Shares

Machinery - CA 4,000,000
Machinery - FV 3,700,000
IMPAIRMENT LOSS 300,000 PROBLEM 22-8
(1) Retained Earnings
Share Dividend Payable
Dividend Payable - Dec 31 3,700,000 Share Premium
Dividend Payable - Apr 1 3,500,000
Decrease in div payable 200,000
(2) Share Dividend Payable
Ordinary Shares

(1) Retained Earnings

Share Dividend Payable

(2) Share Dividend Payable

Treasury Shares
 ORIENTAL COMPANY
etained Earnings 1,200,000 Retained Earnings
apital Liquidated 300,000 Add: Accumulated Depletion
Cash Dividend Payable 1,500,000 TOTAL
To record dividend declaration LESS: Capital Liquidated
MAXIMUM DIVIDENDS
ash Dividend Payable 1,500,000
1,500,000 Share Capital 5,000,000
To record payment of dividend Divide by par value 100
Issued & outstanding shares 50,000
dividend per share 30
Dividend for the year 1,500,000

ICON COMPANY
etained Earnings 1,500,000 Retained Earnings
apital Liquidated 500,000 Add: Accumulated Depletion
Cash Dividend Payable 2,000,000 TOTAL
To record dividend declaration LESS: Capital Liquidated 1,800,000
Unrealized Depletion 100,000
ash Dividend Payable 2,000,000 MAXIMUM DIVIDENDS
2,000,000
To record payment of dividend

ORIENTAL COMPANY
etained Earnings 5,200,000 CASH ALTERNATIVE
Dividend Payable 5,200,000 80% 10 500,000
To record dividend declaration SHARE ALTERNATIVE
20% 10 600,000
ividend Payable 5,200,000 DIVIDEND PAYABLE
5,000,000
Retained Earnings 200,000
To record payment of dividend

etained Earnings 5,200,000

Dividend Payable 5,200,000 Property Dividend 6,000,000
To record dividend declaration Dividend Payable - Dec 31 5,200,000
Increase 800,000
etained Earnings 800,000
Dividend Payable 800,000
To record increase in div payable

ividend Payable 6,000,000

 Car Fleet 4,000,000
Gain on distribution of property dividend 2,000,000
To record payment of dividend

VALERIE COMPANY
etained Earnings 1,000,000
Share Dividend Payable 1,000,000
To record share dividend declaration

hare Dividend Payable 1,000,000

Ordinary Shares 1,000,000
To record issuance of share dividend

etained Earnings 750,000

Share Dividend Payable 500,000
Share Premium 250,000
To record share dividend declaration

hare Dividend Payable 500,000

Ordinary Shares 500,000
To record issuance of share dividend

NIKKO COMPANY
etained Earnings 490,000 Authorized Shares 50,000
Share Dividend Payable 350,000 Less: Unissued Shares 20,000
Share Premium 140,000 Issued Shares 30,000
To record share dividend declaration Subscribed Shares 10,000
TOTAL 40,000
hare Dividend Payable 350,000 Less: Treasury Shares 5,000
Ordinary Shares 350,000 Outstanding Shares 35,000
To record issuance of share dividend
10% Share Dividend 140

etained Earnings 420,000 # of Shares 3,500

Share Dividend Payable 420,000 Cost per share of treasury shares 120
To record share dividend declaration Treasury Shares available for 420,000
dividends
hare Dividend Payable 420,000
Treasury Shares 420,000
To record issuance of share dividend
 PROBLEM 22-9 MICHELLE COMPANY
1,200,000 A (1) Retained Earnings 150,000
1,000,000 10 Share Dividend Payable 100,000
2,200,000 Share Premium 50,000
500,000 To record share dividend declaration
1,700,000
(2) Share Dividend Payable 100,000
Ordinary Shares 100,000
To record issuance of share dividend

B (1) Retained Earnings 500,000

Share Dividend Payable 500,000
To record share dividend declaration

1,500,000 (2) Share Dividend Payable 500,000

2,500,000 Ordinary Shares 500,000
4,000,000 To record issuance of share dividend

1,900,000 C (1) Retained Earnings 225,000

2,100,000 10 Share Dividend Payable 150,000
Share Premium 75,000
To record share dividend declaration

(2) Share Dividend Payable 150,000

Ordinary Shares 150,000
To record issuance of share dividend
4,000,000
D (1) Retained Earnings 200,000
1,200,000 Share Dividend Payable 200,000
5,200,000 To record share dividend declaration

(2) Share Dividend Payable 200,000

Ordinary Shares 170,000
Fractional Warrants Outstanding 30,000
2 To record issuance of share dividend and
fractional warrants

(3) Fractional Warrants Outstanding 30,000

90% Ordinary Shares 27,000
Share Premium 3,000
To record issuance 2,700 shares and expiration
of 300 warrants
 PROBLEM 22-10 NATIONAL COMPANY
2020
Sept 15 Retained Earnings 200,000
Share Dividend Payable 200,000
1 To record share dividend declaration

Oct 15 Share Dividend Payable 200,000

Ordinary Shares 180,000
Fractional Warrants Outstanding 20,000
To record issuance of share dividend and
fractional warrants

2 Dec 1 Fractional Warrants Outstanding 20,000

Ordinary Shares 15,000
Share Premium 5,000
To record issuance 1,500 shares and expiration
of 500 warrants

2021
Sept 15 Retained Earnings 239,000
Scrip Dividend Payable 239,000
To record share dividend declaration

Nov 15 Scrip Dividend Payable 239,000

12% Interest Expense 4,780
Cash 243,780
To record payment of scrio dividend

Dec 1 Retained Earnings 478,000

Property Dividend Payable 478,000
To record dividend declaration
490,000
Dec 31 Retained Earnings 239,000
Property Dividend Payable 239,000
To record increase in fair value

Dec 31 Property Dividend Payable 717,000

Investment in Equity Securities 358,500
Gain on distribution of property dividend 358,500
To record distribution of dividend
Outstanding Shares 100,000
Share dividend 10%
# of shares for dividends 10,000
Market Value 15
150,000

Outstanding Shares 100,000

Share dividend 50%
# of shares for dividends 50,000
Market Value 10
500,000

Outstanding Ordinary Shares 100,000

Outstanding preference Shares 50,000
Total Shares 150,000
Share dividend 10%
# of shares for dividends 15,000
Market Value 15
225,000

Outstanding Shares 100,000

Share dividend 20%
# of shares for dividends 20,000
Par Value 10
200,000

Share Dividend Payable 200,000

Fractional Shares 3,000 30,000
Ordinary Shares 170,000

Fractional Shares 30,000

90% Issuance 27,000
Share Premium 3,000
Outstanding Shares 100,000
Share dividend 20%
# of shares for dividends 20,000
Par Value 10
200,000

Share Dividend Payable 200,000

Fractional Shares 2,000 20,000
Ordinary Shares 180,000

Fractional Shares 20,000

Issuance 1,500 15,000
Share Premium 500 5,000

Outstanding Shares 119,500

Scrip dividend per share 2
Scrip Dividend Payable 239,000

Dividend Payable - Dec 31 6

Dividend Payable - Oct 31 4
Increase in quoted price 2
Multiply by # shares (equity sec) 119,500
Increase in div payable 239,000
 PROBLEM 23-1 MALICE COMPANY
2016
Dec 31 Retained Earnings 200,000
Retained Earnings Appropriated for sinking fund 200,000
To record appropriations

2017
Dec 31 Retained Earnings 200,000
Retained Earnings Appropriated for sinking fund 200,000
To record appropriations

2018
Dec 31 Retained Earnings 200,000
Retained Earnings Appropriated for sinking fund 200,000
To record appropriations

2019
Dec 31 Retained Earnings 200,000
Retained Earnings Appropriated for sinking fund 200,000
To record appropriations

2020
Dec 31 Retained Earnings 200,000
Retained Earnings Appropriated for sinking fund 200,000
To record appropriations

2021
Jan 1 Bonds Payable 1,000,000
Cash 1,000,000
To record payment

Jan 1 Retained Earnings Appropriated for sinking fund 1,000,000

Retained Earnings 1,000,000
To revert appropriations
30%
250000 (1) Retained Earnings 750,000
10 Shares distributable 750,000
To record declaration of 30% share dividend

(2) Shares distributable 750,000

Share Capital 750,000 40000
To record issuance of share dividends 100

PROBLEM 23-2 MAZDA COMPANY

 2020
Dec 31 Retained Earnings 5,000,000
Retained Earnings Appropriated for Plant Expansion 5,000,000
To record appropriations

2021
Dec 31 Retained Earnings Appropriated for Plant Expans 3,000,000
Retained Earnings 3,000,000
To revert appropriations

2022
July Retained Earnings Appropriated for Plant Expans 2,000,000
Retained Earnings 2,000,000
To revert appropriations
PROBLEM 23-6 PEACH COMPANY
Dec 31 Retained Earnings 250,000 Inventory - CA
Inventory 250,000 Inventory - FV
To record decrease in fair value Decrease in FV

Dec 31 Retained Earnings 1,000,000 PPE - CA

Property, Plant & Equipment 1,000,000 PPE - FV
To record decrease in fair value Decrease in FV

Dec 31 Share Capital 1,750,000 Reduction of par value (10 to 5)

Share Premium 1,750,000 Shares Outstanding
To record recapitalization Share Capital reduction

Dec 31 Share Premium 1,700,000 Retained Earnings (Deficit) - before ad

Retained Earnings 1,700,000 Inventory - Decrease
To record appropriations PPE - Decrease
Retained Earnings (Deficit) - for offsetti

SHAREHOLDRES' EQU
Share Capital, P5 par, authorized, issu
and outstanding 350,000 shares
Share Premium
Shareholders' Equity

PROBLEM 23-7 SUBIC COMPANY

Dec 31 Retained Earnings 150,000
Inventory 150,000
To record obsolete inventory

Dec 31 Note Payable 500,000 Equipment @ cost

Accumulated Depreciation 1,200,000 Less: Accumu. Dep'n
Retained Earnings 300,000 Carrying Amount
Property, Plant & Equipment 2,000,000 Less: Note Payable
To record decrease in fair value LOSS

Dec 31 Retained Earnings 1,200,000

Goodwill 1,200,000
To record write-off of goodwill

Dec 31 Mortgage Payable 4,200,000

Preference Share Capital 4,000,000
Share Premium - PS 200,000
To record equity swap Reduction of par value (100 to 20)
Shares Outstanding
Dec 31 Share Capital 4,000,000 Share Capital reduction
Share Premium 4,000,000
To record recapitalization Retained Earnings (Deficit) - before ad
Inventory - Decrease
Dec 31 Share Premium 4,450,000 Loss on disposal
Retained Earnings 4,450,000 Goodwill write-off
To record appropriations Retained Earnings (Deficit) - for offsetti

PROBLEM 23-8 BACOLOD COMPANY

Dec 31 Preference Share Capital 1,500,000 Prop. Plant & Eqpt
Retained Earnings 500,000 Accum. Dep'n
Bonds Payable 2,000,000 CA / SV / RS
To record issuance of bonds for preference shares

Dec 31 Retained Earnings 500,000

Goodwill 500,000
To record write-off of goodwill

Dec 31 Property, Plant & Equipment 4,000,000 Retained Earnings (Deficit) - before ad
Accumulated Depreciation 1,000,000 Issuance of Bonds
Revaluation Surplus 3,000,000 Goodwill write-off
To record revaluation Retained Earnings (Deficit) - for offsetti

Dec 31 Revaluation Surplus 2,000,000

Retained Earnings 2,000,000
To record recapitalization
 3,250,000
3,000,000
250,000

6,000,000
5,000,000
1,000,000

f par value (10 to 5) 5

350,000
1,750,000

rnings (Deficit) - before adjustment -450,000

250,000
1,000,000 -1,250,000
rnings (Deficit) - for offsetting -1,700,000

SHAREHOLDRES' EQUITY
al, P5 par, authorized, issued,
utstanding 350,000 shares 1,750,000
850,000
2,600,000

SUBIC COMPANY
Statement of Financial Position
ASSETS
Cash 200,000
Accounts Receivable 300,000
2,000,000 Inventory 350,000
1,200,000 Property, Plant & Equipment 7,900,000
800,000 Less: Accumulated Depreciation 1,900,000 6,000,000
500,000 TOTAL ASSETS 6,850,000
300,000
LIABILITIES & SHAREHOLDERS' EQUITY
Accounts Payable 1,100,000
Ordinary Share Capital, P20 par, 50,000 shares 1,000,000
Preference Share Capital, P100 par, 40,000 shares 4,000,000
Share Premium - OS 550,000
Share Premium - PS 200,000
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY 6,850,000

f par value (100 to 20) 80

50,000
 4,000,000

rnings (Deficit) - before adjustment -2,800,000

150,000
300,000
1,200,000 -1,650,000
rnings (Deficit) - for offsetting -4,450,000

COST REP COST INC BACOLOD COMPANY

8,000,000 12,000,000 4,000,000 Statement of Financial Position
2,000,000 3,000,000 1,000,000 ASSETS
6,000,000 9,000,000 3,000,000 Cash 425,000
Other Current Assets 1,325,000
Property, Plant & Equipment 12,000,000
Less: Accumulated Depreciation 3,000,000 9,000,000
TOTAL ASSETS 10,750,000

LIABILITIES & SHAREHOLDERS' EQUITY

rnings (Deficit) - before adjustment -1,000,000 Current Liabilities 2,000,000
500,000 Bonds Payable 2,000,000
500,000 -1,000,000 Ordinary Share Capital, P100 par, 50,000 shares 5,000,000
rnings (Deficit) - for offsetting -2,000,000 Share Premium - OS 750,000
Revaluation Surplus 1,000,000
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY 10,750,000
 PROBLEM 17-1 ABC COMPANY
2020
5% Dec 31 Employee Benefit Expense 200,000 PROBLEM 17-5
4000000 Cash 200,000
To record payment Salary - 2020
2021 FV of 1 @ 4% for 10 p
4200000 Dec 31 Employee Benefit Expense 210,000 FINAL SALARY
Cash 210,000 Percent of payment
To record payment Annual Pension Paym
# of years in service
PROBLEM 17-2 MOON COMPANY PAST SERVICE (12 yrs
2020 Add'l Services (10 ys)
Dec 31 Employee Benefit Expense 300,000 TOTAL BENEFIT
Accrued Benefit Cost 300,000
To record accrued benefit cost
2021
Dec 31 Accrued Benefit Cost 300,000 PROBLEM 17-8
Cash 300,000 FINAL SALARY
To record payment Percent of benefit
Annual Pension Paym
PROBLEM 17-3 SUN COMPANY # of years in service
2020 TOTAL BENEFIT
Dec 31 Employee Benefit Expense 350,000
Prepaid Benefit Cost 50,000
Cash 400,000
To record payment

PROBLEM 17-6
Current Salary - 2020
FV of 1 at 3% for 25 p
Future Salary - 2045
Percent of Benefit
Annual Pension Paym
# of years in service
Total Benefit
PV of an OA of 1 @8%
PBO - Jan 1, 2046
PV of 1 @ 8% for 25 p
PBO - Dec 31, 2020

Total Service Years

TOTAL BENEFIT per y
PV of an OA of 1 @8%
PBO - Jan 1, 2046
Life Expectancy
TOTAL BENEFITS
 1.4802443 Current Interest Expense Projected
PROBLEM 17-5 ALPHA CO Service Cost 10% Benefit Obligation

Salary - 2020 300,000 2020 0.385543 61,625

FV of 1 @ 4% for 10 periods 1.48 2021 0.424098 5,649 6,163 73,437
FINAL SALARY 444,000 2022 0.466507 6,214 7,344 86,994
Percent of payment 3% 2023 0.513158 6,835 8,699 102,529
Annual Pension Payment 13,320 2024 0.564474 7,519 10,253 120,301
# of years in service 2025 0.620921 8,271 12,030 140,601
PAST SERVICE (12 yrs) 159,840 2026 0.683013 9,098 14,060 163,759
Add'l Services (10 ys) 133,200 2027 0.751315 10,008 16,376 190,143
TOTAL BENEFIT 293,040 2028 0.826446 11,008 19,014 220,165
2029 0.909091 12,109 22,017 254,291
2030 1 13,320 25,429 293,040

PROBLEM 17-8 ALPHA CO Current Interest Expense Projected

FINAL SALARY 1,500,000 Service Cost 12% Benefit Obligation
Percent of benefit 5%
Annual Pension Payment 75,000 2020 0.385543 28,916 3,470 32,386
# of years in service 10 2021 0.424098 31,807 3,886 68,079
TOTAL BENEFIT 750,000 2022 0.466507 34,988 8,170 111,237
2023 0.513158 38,487 13,348 163,072
2024 0.564474 42,336 19,569 224,976
2025 0.620921 46,569 26,997 298,543
2026 0.683013 51,226 35,825 385,594
2027 0.751315 56,349 46,271 488,213
2028 0.826446 61,983 58,586 608,783
2029 0.909091 68,182 73,054 750,018

PROBLEM 17-6 WOODSTOCK CO PV of 1 @ PV of OA of Current Interest Expense

Current Salary - 2020 500,000 8% for n @ 8% for 15 Service Cost 8%
FV of 1 at 3% for 25 periods 2.094 2020
Future Salary - 2045 1,047,000 2021 0.157699 8.559 28,264 20,934
Percent of Benefit 2% 2022 0.170315 8.559 30,525 24,869
Annual Pension Payment 20,940 2023 0.183941 8.559 32,967 29,301
# of years in service 10 2024 0.198656 8.559 35,604 34,282
Total Benefit 209,400 2025 0.214548 8.559 38,453 39,873
PV of an OA of 1 @8% for 15 periods 8.559 2026 0.231712 8.559 41,529 46,139
PBO - Jan 1, 2046 1,792,255 2027 0.250249 8.559 44,851 53,153
PV of 1 @ 8% for 25 periods 0.146 2028 0.270269 8.559 48,439 60,993
PBO - Dec 31, 2020 261,669 2029 0.29189 8.559 52,314 69,748
2030 0.315242 8.559 56,499 79,512
Total Service Years 35 2031 0.340461 8.559 61,019 90,393
TOTAL BENEFIT per year 732,900 2032 0.367698 8.559 65,901 102,506
PV of an OA of 1 @8% for 15 periods 8.559 2033 0.397114 8.559 71,173 115,979
PBO - Jan 1, 2046 6,272,891 2034 0.428883 8.559 76,867 130,951
Life Expectancy 15 2035 0.463193 8.559 83,016 147,577
TOTAL BENEFITS 10,993,500 2036 0.500249 8.559 89,657 166,024
2037 0.540269 8.559 96,830 186,478
2038 0.58349 8.559 104,576 209,143
2039 0.63017 8.559 112,942 234,241
2040 0.680583 8.559 121,978 262,015
2041 0.73503 8.559 131,736 292,735
2042 0.793832 8.559 142,275 326,693
2043 0.857339 8.559 153,657 364,210
2044 0.925926 8.559 165,950 405,639
2045 1 8.559 179,225 451,366

ANNUAL INTEREST PV of BENFITS

BENEFITS 8% 6,272,671
1 2046 732,900
### 501,814 6,041,585
2 2047 732,900 483,327 5,792,012
3 2048 732,900 463,361 5,522,473
4 2049 732,900 441,798 5,231,371
5 2050 732,900 418,510 4,916,980
6 2051 732,900 393,358 4,577,439
7 2052 732,900 366,195 4,210,734
8 2053 732,900 336,859 3,814,692
9 2054 732,900 305,175 3,386,968
10 2055 732,900 270,957 2,925,025
11 2056 732,900 234,002 2,426,127
12 2057 732,900 194,090 1,887,318
13 2058 732,900 150,985 1,305,403
14 2059 732,900 104,432 676,935
15 2060 732,900 55,965 0
10,993,500
 PROBLEM 17-11
Final Salary 1,500,000
Percent of benefit 20%
Annual Pension Payment 300,000

PV Current Interest Expense Projected

YEAR FACTOR Service Cost 12% Benefit Obligation
2020 0.797 239,158 239,158
2021 0.893 267,857 28,699 535,714
2022 1.000 300,000 64,286 900,000

PROBLEM 17-9
Final Salary 1,440,000
Percent of benefit 10%
Annual Pension Payment 144,000

PV Current Interest Expense Projected

YEAR FACTOR Service Cost 12% Benefit Obligation
2020 0.797 114,796 114,796
2021 0.893 128,571 13,776 257,143
2022 1.000 144,000 30,857 432,000

PROBLEM 17-7 WENDY CO

Current Salary - 2020 600,000
FV of 1 at 4% for 10 periods 1.48
Future Salary - 2030 888,000
Percent of Benefit 2%
Annual Pension Payment 17,760
Projected # of years in service 15
Benefit Obligation Total Benefit 266,400
261,669 PV of an OA of 1 @10% for 8 periods 5.335
310,866 PBO - Jan 1, 2030 1,421,244
366,261 PV of 1 @ 10% for 10 periods 0.386
428,528 PBO - Dec 31, 2020 548,600
498,415
576,740 Total Service Years 25
664,408 TOTAL BENEFIT per year 444,000
762,412 PV of an OA of 1 @10% for 8 periods 5.335
871,844 PBO - Jan 1, 2030 2,368,740
993,906 Life Expectancy 8
1,129,918 TOTAL BENEFITS 3,552,000
1,281,330
1,449,737
 1,636,889 PROBLEM 17-10 JESSABEL CO
1,844,707 Current Salary - 2020 500,000 2020
2,075,300 FV of 1 at 4% for 5 periods 1.217 2021
2,330,981 Future Salary - 2030 608,500 2022
2,614,290 Percent of Benefit 3% 2023
2,928,009 Annual Pension Payment 18,255 2024
3,275,192 # of years in service 15 2025
3,659,186 Total Benefit 273,825
4,083,656 PV of an OA of 1 @12% for 6 periods 4.111
4,552,624 PBO - Jan 1, 2030 1,125,695
5,070,491 PV of 1 @ 12% for 5 periods 0.567 1
5,642,080 PBO - Dec 31, 2020 638,269 2
6,272,671 3
Total Service Years 20 4
V of BENFITS TOTAL BENEFIT per year 365,100 5
6,272,671 PV of an OA of 1 @12% for 6 periods 4.111 6
PBO - Jan 1, 2030 1,500,926
Life Expectancy 6
TOTAL BENEFITS 2,190,600
PV of 1 @ PV of OA of Current Interest Expense Projected
12% for n @ 12% for 6 Service Cost 12% Benefit Obligation

638,269
0.635518 4.111 47,693 76,592 762,554
0.71178 4.111 53,416 91,507 907,477
0.797194 4.111 59,826 108,897 1,076,201
0.892857 4.111 67,006 129,144 1,272,351
1 4.111 75,046 152,682 1,500,079

ANNUAL INTEREST PV of BENFITS

BENEFITS 12% 1,500,079
2026 365,100 180,010 1,314,989
2027 365,100 157,799 1,107,687
2028 365,100 132,922 875,510
2029 365,100 105,061 615,471
2030 365,100 73,857 324,228
2031 365,100 40,872 0
2,190,600
Problem 18-1 SHAKIRA COMPANY Problem 18-1
Current Service Cost
Fair Value of Plan Assets 5,000,000 Interest Expense
Projected Benefit Obligation 6,000,000 Interest Income
Prepaid/Accrued Benefit Cost 1,000,000 Employee Benefit Expense
DISCOUNT RATE 10%
Actual Return on Plan Assets
Interest Income
Remeasurement Gain
31-Dec Employee Benefit Expense 1,650,000 Actuarial Gain (Decrease in PBO)
Prepaid/Accrued Benefit Cost 300,000 NET REMEASUREMENT GAIN - OCI
Remeasurment Gain - OCI 150,000
Cash 1,200,000 Fair Value of Plan Assets - Jan 1
To record employee benefit expense for DBP Actual Return on Plan Assets
Contributions to the Plan
Benefits Paid to Retirees
Prepaid/Accrued Benefit Cost - Jan 1 1,000,000 Fair Value of Plan Assets - Dec 31
Credit Adjustment 300,000 Projected Benefit Obligation-Jan 1
Prepaid/Accrued Benefit Cost - Dec 31 1,300,000 Current Service Cost
Interest Expense
Actuarial Gain (Decrease in PBO)
Benefits Paid to Retirees
Projected Benefit Obligation-Dec 31
Prepaid/Accrued Benefit Cost - Dec 3

Problem 18-2 SHIELA COMPANY Problem 18-2

Current Service Cost
Fair Value of Plan Assets 5,750,000 Interest Expense
Projected Benefit Obligation 6,500,000 Interest Income
Prepaid/Accrued Benefit Cost 750,000 Employee Benefit Expense
DISCOUNT RATE 10%
Actual Return on Plan Assets
Interest Income
Remeasurement Gain
31-Dec Employee Benefit Expense 675,000 Actuarial Gain (Decrease in PBO)
Prepaid/Accrued Benefit Cost 350,000 NET REMEASUREMENT GAIN - OCI
Remeasurment Gain - OCI 125,000
Cash 900,000 Fair Value of Plan Assets - Jan 1
To record employee benefit expense for DBP Actual Return on Plan Assets
 Contributions to the Plan
Benefits Paid to Retirees
Prepaid/Accrued Benefit Cost - Jan 1 750,000 Fair Value of Plan Assets - Dec 31
Debit Adjustment (350,000) Projected Benefit Obligation-Jan 1
Prepaid/Accrued Benefit Cost - Dec 31 400,000 Current Service Cost
Interest Expense
Actuarial Gain (Decrease in PBO)
Benefits Paid to Retirees
Projected Benefit Obligation-Dec 31
Prepaid/Accrued Benefit Cost - Dec 3
 Problem 18-3 RACHEL COMPANY
Current Service Cost 1,550,000
Interest Expense 600,000 Fair Value of Plan Assets
Interest Income -500,000 Projected Benefit Obligation
Employee Benefit Expense 1,650,000 Prepaid/Accrued Benefit Cost
DISCOUNT RATE 10%
Actual Return on Plan Assets 650,000
Interest Income -500,000
Remeasurement Gain 150,000
Actuarial Gain (Decrease in PBO) 31-Dec Employee Benefit Expense
NET REMEASUREMENT GAIN - OCI 150,000 Remeasurment Loss - OCI
Prepaid/Accrued Benefit Cost
Fair Value of Plan Assets - Jan 1 5,000,000 Cash
Actual Return on Plan Assets 650,000 To record employee benefit expense for DBP
Contributions to the Plan 1,200,000
Benefits Paid to Retirees
Fair Value of Plan Assets - Dec 31 6,850,000 Prepaid/Accrued Benefit Cost - Jan 1
Projected Benefit Obligation-Jan 1 6,000,000 Credit Adjustment
Current Service Cost 1,550,000 Prepaid/Accrued Benefit Cost - Dec 31
Interest Expense 600,000
Actuarial Gain (Decrease in PBO) 0
Benefits Paid to Retirees 0
Projected Benefit Obligation-Dec 31 8,150,000
Prepaid/Accrued Benefit Cost - Dec 31 1,300,000

Problem 18-4 Klaudine COMPANY

Fair Value of Plan Assets
Current Service Cost 600,000 Projected Benefit Obligation
Interest Expense 650,000 Prepaid/Accrued Benefit Cost
Interest Income -575,000 DISCOUNT RATE 8%
Employee Benefit Expense 675,000 2020
1-Jan Retained Earnings
Actual Return on Plan Assets 700,000 Prepaid/Accrued Benefit Cost
Interest Income -575,000 To record transitional effect of adopting PAR 1
Remeasurement Gain 125,000
Actuarial Gain (Decrease in PBO) Unamortized Past Service Cost
NET REMEASUREMENT GAIN - OCI 125,000 Unrecognized Actuarial Gain
Transitional Effect
Fair Value of Plan Assets - Jan 1 5,750,000
Actual Return on Plan Assets 700,000 31-Dec Employee Benefit Expense
Contributions to the Plan 900,000 Prepaid/Accrued Benefit Cost
Benefits Paid to Retirees -100,000 Remeasurment Gain - OCI
Fair Value of Plan Assets - Dec 31 7,250,000 Cash
Projected Benefit Obligation-Jan 1 6,500,000 To record employee benefit expense for DBP
Current Service Cost 600,000
Interest Expense 650,000
Actuarial Gain (Decrease in PBO) 0 Prepaid/Accrued Benefit Cost - Jan 1
Benefits Paid to Retirees -100,000 credit Adjustment
Projected Benefit Obligation-Dec 31 7,650,000 Prepaid/Accrued Benefit Cost - Dec 31
Prepaid/Accrued Benefit Cost - Dec 31 400,000
HEL COMPANY Problem 18-3
Current Service Cost 1,450,000
6,700,000 Past Service Cost 300,000
7,600,000 Interest Expense 760,000
900,000 Interest Income -670,000
Employee Benefit Expense 1,840,000

Actual Return on Plan Assets 500,000

Interest Loss -670,000
1,840,000 Remeasurement Gain -170,000
170,000 Actuarial Gain (Decrease in PBO)
510,000 NET REMEASUREMENT Loss - OCI -170,000
1,500,000
yee benefit expense for DBP Fair Value of Plan Assets - Jan 1 6,700,000
Actual Return on Plan Assets 500,000
Contributions to the Plan 1,500,000
900,000 Benefits Paid to Retirees -800,000
510,000 Fair Value of Plan Assets - Dec 31 7,900,000
1,410,000 Projected Benefit Obligation-Jan 1 7,600,000
Current Service Cost 1,450,000
Past Service Cost 300,000
Interest Expense 760,000
Actuarial Gain (Decrease in PBO) 0
Benefits Paid to Retirees -800,000
Projected Benefit Obligation-Dec 31 9,310,000
Prepaid/Accrued Benefit Cost - Dec 31 1,410,000

dine COMPANY Problem 18-4

6,000,000 Current Service Cost 900,000
7,500,000 Interest Expense 600,000
1,500,000 Interest Income -480,000
Employee Benefit Expense 1,020,000

300,000 Actual Return on Plan Assets 700,000

300,000 Interest Income -480,000
tional effect of adopting PAR 19R Remeasurement Gain 220,000
Actuarial Loss (Increase in PBO)
300,000 NET REMEASUREMENT GAIN - OCI 220,000

300,000 Fair Value of Plan Assets - Jan 1 6,000,000

Actual Return on Plan Assets 700,000
1,020,000 Contributions to the Plan 500,000
 300,000 Benefits Paid to Retirees -150,000
220,000 Fair Value of Plan Assets - Dec 31 7,050,000
500,000 Projected Benefit Obligation-Jan 1 7,500,000
yee benefit expense for DBP Current Service Cost 900,000
Interest Expense 600,000
Actuarial Loss (Increase in PBO) 0
fit Cost - Jan 1 1,500,000 Benefits Paid to Retirees -150,000
300,000 Projected Benefit Obligation-Dec 31 8,850,000
fit Cost - Dec 31 1,800,000 Prepaid/Accrued Benefit Cost - Dec 31 1,800,000
Problem 18-6 CHARLTON COMPANY

Fair Value of Plan Assets 4,750,000

Projected Benefit Obligation 5,500,000 Current Service Cost
Prepaid/Accrued Benefit Cost 750,000 Interest Expense
DISCOUNT RATE 6% Interest Income
2020 Employee Benefit Expense
1-Jan Retained Earnings 400,000
Prepaid/Accrued Benefit Cost 400,000 Actual Return on Plan Assets
To record transitional effect of adopting PAR 19R Interest Income
Remeasurement Gain
Unamortized Past Service Cost 1,250,000 Actuarial Loss (Increase in PBO)
Unrecognized Actuarial Gain -850,000 NET REMEASUREMENT GAIN - OCI
Transitional Effect 400,000
Fair Value of Plan Assets - Jan 1
Actual Return on Plan Assets
31-Dec Employee Benefit Expense 970,000 Contributions to the Plan
Prepaid/Accrued Benefit Cost 430,000 Benefits Paid to Retirees
Remeasurment Gain - OCI 50,000 Fair Value of Plan Assets - Dec 31
Cash 1,350,000 Projected Benefit Obligation-Jan 1
To record employee benefit expense for DBP Current Service Cost
Interest Expense
Actuarial Loss (Increase in PBO)
Prepaid/Accrued Benefit Cost - Jan 1 750,000 Benefits Paid to Retirees
Debit Adjustment (430,000) Projected Benefit Obligation-Dec 31
Prepaid/Accrued Benefit Cost - Dec 31 320,000 Prepaid/Accrued Benefit Cost - Dec 3

Problem 18-7 TRISHA COMPANY

Fair Value of Plan Assets 6,000,000 PV of Defined Benefit Obligation

Projected Benefit Obligation 8,000,000 Settlement Price
Prepaid/Accrued Benefit Cost 2,000,000 Settlement Gain
DISCOUNT RATE 12%
2020 Current Service Cost
31-Dec Employee Benefit Expense 940,000 Interest Expense
Prepaid/Accrued Benefit Cost 160,000 Interest Income
Remeasurment Gain - OCI 80,000 Settlement Gain
Cash 700,000 Employee Benefit Expense
To record employee benefit expense for DBP
Actual Return on Plan Assets
Interest Income
Prepaid/Accrued Benefit Cost - Jan 1 2,000,000 Remeasurement Gain
Credit Adjustment 160,000
Prepaid/Accrued Benefit Cost - Dec 31 2,160,000 Fair Value of Plan Assets - Jan 1
Actual Return on Plan Assets
Contributions to the Plan
Settlement Price
Fair Value of Plan Assets - Dec 31
Projected Benefit Obligation-Jan 1
Current Service Cost
Interest Expense
PV of Defined Benefit Obligation
Benefits Paid to Retirees
Projected Benefit Obligation-Dec 31
Prepaid/Accrued Benefit Cost - Dec 3
 Problem 18-5 PEDRO COMPANY

Fair Value of Plan Assets

Current Service Cost 925,000 Projected Benefit Obligation
Interest Expense 330,000 Prepaid/Accrued Benefit Cost
Interest Income -285,000 DISCOUNT RATE 10%
Employee Benefit Expense 970,000

Actual Return on Plan Assets 485,000

Interest Income -285,000 31-Dec Employee Benefit Expense
Remeasurement Gain 200,000 Prepaid/Accrued Benefit Cost
Actuarial Loss (Increase in PBO) -150,000 Remeasurment Gain - OCI
NET REMEASUREMENT GAIN - OCI 50,000 Cash
To record employee benefit expense for DBP
Fair Value of Plan Assets - Jan 1 4,750,000
Actual Return on Plan Assets 485,000
Contributions to the Plan 1,350,000 Prepaid/Accrued Benefit Cost - Jan 1
Benefits Paid to Retirees -995,000 Debit Adjustment
Fair Value of Plan Assets - Dec 31 5,590,000 Prepaid/Accrued Benefit Cost - Dec 31
Projected Benefit Obligation-Jan 1 5,500,000
Current Service Cost 925,000
Interest Expense 330,000
Actuarial Loss (Increase in PBO) 150,000
Benefits Paid to Retirees -995,000
Projected Benefit Obligation-Dec 31 5,910,000
Prepaid/Accrued Benefit Cost - Dec 31 320,000

Problem 18-8 Rachelleen COMPANY

DISCOUNT RATE 10%
PV of Defined Benefit Obligation 1,000,000 Fair Value of Plan Assets
Settlement Price 800,000 Projected Benefit Obligation
Settlement Gain 200,000 Prepaid/Accrued Benefit Cost
Asset Ceiling
Current Service Cost 900,000 Effect of asset Ceiling
Interest Expense 960,000
Interest Income -720,000
Settlement Gain -200,000 Current Service Cost
Employee Benefit Expense 940,000 Interest Expense
Interest Income
Actual Return on Plan Assets 800,000 Interest Expense on Asset Ceiling
Interest Income -720,000 Past Service Cost
Remeasurement Gain 80,000 Employee Benefit Expense
Fair Value of Plan Assets - Jan 1 6,000,000 2020
Actual Return on Plan Assets 800,000 31-Dec Employee Benefit Expense
Contributions to the Plan 700,000 Prepaid/Accrued Benefit Cost
Settlement Price -800,000 Remeasurment Gain - OCI
Fair Value of Plan Assets - Dec 31 6,700,000 Cash
Projected Benefit Obligation-Jan 1 8,000,000 To record employee benefit expense for DBP
Current Service Cost 900,000
Interest Expense 960,000 Prepaid/Accrued Benefit Cost - Jan 1
PV of Defined Benefit Obligation -1,000,000 Debit Adjustment
Benefits Paid to Retirees Prepaid/Accrued Benefit Cost - Dec 31
Projected Benefit Obligation-Dec 31 8,860,000
Prepaid/Accrued Benefit Cost - Dec 31 2,160,000
RO COMPANY

6,500,000
7,500,000 Current Service Cost 1,200,000
1,000,000 Interest Expense 750,000
Interest Income -650,000
Employee Benefit Expense 1,300,000

Actual Return on Plan Assets 800,000

1,300,000 Interest Income -650,000
250,000 Remeasurement Gain 150,000
350,000 Actuarial Gain (Decrease in PBO) 200,000
1,200,000 NET REMEASUREMENT GAIN - OCI 350,000
yee benefit expense for DBP
Fair Value of Plan Assets - Jan 1 6,500,000
Actual Return on Plan Assets 800,000
1,000,000 Contributions to the Plan 1,200,000
(250,000) Benefits Paid to Retirees -1,500,000
750,000 Fair Value of Plan Assets - Dec 31 7,000,000
Projected Benefit Obligation-Jan 1 7,500,000
Current Service Cost 1,200,000
Interest Expense 750,000
Actuarial Gain (Decrease in PBO) -200,000
Benefits Paid to Retirees -1,500,000
Projected Benefit Obligation-Dec 31 7,750,000
Prepaid/Accrued Benefit Cost - Dec 31 750,000

lleen COMPANY
Fair Value of Plan Assets - Jan 1 6,000,000
6,000,000 Actual Return on Plan Assets 900,000
5,000,000 Contributions to the Plan 1,000,000
1,000,000
700,000 Fair Value of Plan Assets - Dec 31 7,900,000
300,000 Projected Benefit Obligation-Jan 1 5,000,000
Current Service Cost 700,000
Interest Expense 500,000
700,000 Actuarial Gain (Decrease in PBO) -500,000
500,000 Past Service Cost 200,000
-600,000 Projected Benefit Obligation-Dec 31 5,900,000
30,000 Prepaid/Accrued Benefit Cost - Dec 31 2,000,000
200,000 Asset Ceiling 1,200,000
830,000 Effect of asset Ceiling 800,000
 Actual Return on Plan Assets 900,000
830,000 Interest Income -600,000
500,000 Remeasurement Gain 300,000
330,000 Actuarial Gain (Decrease in PBO) 500,000
1,000,000 Effect on Asset Ceiling-Dec 800,000
yee benefit expense for DBP Effect on Asset Ceiling-Jan 300,000
Total Change 500,000
700,000 Interest Expense on Asset Ceiling -30,000
500,000 Remeasurement Loss -470,000
1,200,000 NET REMEASUREMENT GAIN 330,000
Problem 16-1 ACCLAIM Company
2019
Jan 2 Investment in Shares 100,000 # of SHAREs
Cash 100,000 ACQ 2,000
To record purchase

Dec 31 Investment in Shares 198,000 ACQ 3,000

Cash 198,000
To record purchase
2020
Jul 15 Cash 25,000 DIV 5,000
Dividend Income 25,000
To record receipt
DIV 6,000
Dec 15 MEMO: Received 1,000 shares as 20% stock 20% 2,400
dividend. 6,000 shares @ P 298,000 3,600

Dec 28 Cash 180,000 SALE 3,000

Gain on sale of investments 47,000 2,400
Investment in Shares 133,000 600
To record sale

Problem 16-2 DISTRAUGHT Company # of SHAREs

1 Investment in ordinary shares 2,000,000 AYE CO 40,000
Cash 2,000,000
To record purchase

2 MEMO: Received 200,000 shares as Aye Co as result SPLIT 200,000

of a 5 for 1 split from 40,000 shares. 5

DIV 10
3 Investment in preference shares 125,000 15 OS 3,000,000
Investment in ordinary shares 125,000 10 PS 200,000
To record receipt of dividend of preference shares 3,200,000

4 Investment in Ordinary Shares (Bee Co) 300,000 4 AYE CO 50,000

Dividend Income 300,000
To record receipt of dividend in kind

5 Cash 1,200,000 SALE 80,000

Gain on sale of investments 450,000 80,000
Investment in ordinary shares 750,000
To record sale
 Problem 16-3 EFFECTIVE Company
1 Investment in Ordinary Shares (ANA) 300,000
COST Cash 300,000
50 100,000 To record purchase

2 Investment in Ordinary Shares (Bengue 120,000

66 198,000 Dividend Income 120,000
To record receipt

3 Investment in Ordinary Shares (ANA) 420,000

5 25,000 Cash 420,000
To record purchased

298,000 4 Cash 60,000

41.67 100,000 Dividend Income 60,000
55.00 198,000 To record receipt

60 133,000 5 MEMO: Received 20,000 shares as Aye Co as result

41.67 100,000 of a 2 for 1 split from 10,000 shares.
55.00 33,000
6 Cash 646,000
Miscellaneous Expense 34,000
COST Gain on sale of investments 392,000
50 2,000,000 Investment in Ordinary Shares (ANA) 288,000
To record sale

INVESTMENT # of SHAREs COST TOTAL

10.00 2,000,000 SMC - PS 5,000 240 1,200,000
Benguet - OS 10,000 100 1,000,000
ANA - OS 12,000 36 432,000
for 1
0.94 1,875,000 PROBLEM 16-7 EARTH CoMpANY
0.06 125,000 1 Investment in Share 3,200,000
2,000,000 Cash 3,200,000
To record purchase
6 300,000
2 MEMO: Received 20,000 shares as stock dividend.
OS: 100,000 @ 3,200,000
To record receipt
15 750,000 3 Cash 500,000
9.38 750,000 Dividend Income 500,000
To record receipt

4 Stock Rights 500,000

Investment in Equity Securities 500,000
 To record receipt of stock rights

5 Cash 280,000
Stock Rights 200000
Gain on sale of rights 80,000
To record sale of stock rights

6 Investment in Equity Securities 660,000

Stock Rights 300,000
Cash (12K*30) 360,000
To record exercise of rights

7 Cash 2,800,000
Investment in Equity Securities 2,160,000
Gain on Sale of Investment 640,000
To record sale
 # of SHAREs COST Problem 16-9 Dearth Company
SMC 5,000 240 1,200,000 1-Jan Investment in Equity Securities (K)
Benguet 10,000 100 1,000,000 Cash
ANA 4,000 75 300,000 To record purchase

DIV 1-Mar Investment in Queen Company

Benguet 2,000 60 120,000 10K Cash
To record purchase

ACQ 1-Apr Cash

ANA 6,000 70 420,000 Dividend Income
To record receipt

DIV 12K 1-Jul MEMO: Received 2,000 shares from QUEEN Co as 20%
12% 5,000 200.00 1,000,000 dividend. 12,000 shares @ P 660,000

SPLIT AVERAGE 1-Aug Investment in Equity Securities (P)

ANA 20,000 36.00 720,000 Cash
2 To record purchase

SALE 8,000 85 680,000 60K 1-Oct MEMO: Received 60,000 shares of Queen Co as a resu
5% 34,000 of a 5 for 1 split of 12,000 shares.

SPLIT FIFO 1-Oct Cash

ANA 8,000 37.50 300,000 Dividend Income
2 12,000 35.00 420,000 To record receipt

31-Oct MEMO: Received 60,000 stock rights from Queen Co.

to subscribe for one new share for every 10 right
held.

6K 15-Nov Investment in Queen Company

Cash
To record purchase

1-Dec Cash (66K*5)

Dividend Income
To record receipt
Cost/share # of shares COST
Original Acquisition 27.00 20,000 540,000 15-Dec Cash
New Acquisition 55.00 12,000 660,000 Investment in Queen Company
TOTAL 32,000 1,200,000 Gain on sale of investment
To record sale

SUMARY of INVESTMENTS Cost/share

King Corporation Shares 70.00
Queen Corp Shares
LOT 1 11.00
LOT 2 20.00
Princess Corp Shares 50.00
TOTAL
 700,000
700,000

660,000
660,000

50,000
50,000

res from QUEEN Co as 20% stock

es @ P 660,000

500,000
500,000

ares of Queen Co as a result

000 shares.

50,000
50,000

ck rights from Queen Co.

ew share for every 10 rights

120,000
120,000

330,000
330,000

300,000
110,000
190,000

# of shares COST
10,000 700,000

50,000 550,000
6,000 120,000
10,000 500,000
76,000 1,870,000
PROBLEM 23-1 MEDIOCRE COMPANY Principal Amount
2019 12% Fixed Rate
Jan 1 Cash 4,000,000 14% Variable Rate - 2020
Loans Payable 4,000,000 Net Cash Settlement - RECEI
To record receipt of loan P.V. of OA of 1 @ 14% for 1 p
IRS Receivable
Dec 31 Interest Expense 480,000
Cash 480,000
To record interest payment

Dec 31 Interest Rate Swap Receivable 70,160

Unrealized Gain - IRS 70,160
To record derivative asset
2020
Dec 31 Interest Expense 560,000
Cash 560,000
To record interest payment

Dec 31 Cash 80,000

Interest Rate Swap Receivable 70,160
Unrealized Gain - IRS 9,840
To record receipt from speculator

Dec 31 Unrealized Gain - IRS 80,000

Interest Expense 80,000
To record reclassification

Dec 31 Loans Payable 4,000,000

Cash 4,000,000
To record payment of loan

PROBLEM 23-1 MEDIOCRE COMPANY Principal Amount

2019 12% Fixed Rate
Jan 1 Cash 4,000,000 11% Variable Rate - 2020
Loans Payable 4,000,000 Net Cash Settlement - PAYM
To record receipt of loan P.V. of OA of 1 @ 11% for 1 p
IRS Receivable
Dec 31 Interest Expense 480,000
Cash 480,000
To record interest payment

Dec 31 Unrealized Loss - IRS 36,040

Interest Rate Swap Payable 36,040
To record derivative liability
 2020
Dec 31 Interest Expense 440,000
Cash 440,000
To record interest payment

Dec 31 Interest Rate Swap Payable 36,040

Unrealized Loss - IRS 3,960
Cash 40,000
To record payment to speculator

Dec 31 Interest Expense 40,000

Unrealized Loss - IRS 40,000
To record reclassification

Dec 31 Loans Payable 4,000,000

Cash 4,000,000
To record payment of loan

PROBLEM 23-2 COMPETENT COMPANY Principal Amount

2019 10% Fixed Rate
Jan 1 Cash 6,000,000 13% Variable Rate - 2020
Loans Payable 6,000,000 Net Cash Settlement - RECEI
To record receipt of loan P.V. of OA of 1 @ 13% for 1 p
IRS Receivable
Dec 31 Interest Expense 600,000
Cash 600,000
To record interest payment

Dec 31 Interest Rate Swap Receivable 159,300

Unrealized Gain - IRS 159,300
To record derivative asset
2020
Dec 31 Interest Expense 780,000
Cash 780,000
To record interest payment

Dec 31 Cash 180,000

Interest Rate Swap Receivable 159,300
Unrealized Gain - IRS 20,700
To record receipt from speculator

Dec 31 Unrealized Gain - IRS 180,000

Interest Expense 180,000
To record reclassification
 Dec 31 Loans Payable 6,000,000
Cash 6,000,000
To record payment of loan

PROBLEM 23-3 CITADEL COMPANY Principal Amount

2019 8% Fixed Rate
Jan 1 Cash 3,000,000 9% Variable Rate - 2020
Loans Payable 3,000,000 Net Cash Settlement - RECEI
To record receipt of loan P.V. of OA of 1 @ 9% for 4 pe
IRS Receivable
Dec 31 Interest Expense 240,000
Cash 240,000
To record interest payment

Dec 31 Interest Rate Swap Receivable 97,200

Unrealized Gain - IRS 97,200
To record derivative asset
2020
Dec 31 Interest Expense 270,000 IRS Receivable - Dec 31, 201
Cash 270,000 Cash Receipt - Dec 31, 2020
To record interest payment IRS Receivable - Dec 31, 202

Dec 31 Cash 30,000

Interest Rate Swap Receivable 30,000
To record reclassification

Dec 31 Unrealized Gain - IRS 30,000

Interest Expense 30,000
To record reclassification

Dec 31 Unrealized Gain - IRS 67,200 Principal Amount

Interest Rate Swap Receivable 67,200 8% Fixed Rate
To record cancellation 6% Variable Rate - 2020
Net Cash Settlement - PAYM
Dec 31 Unrealized Loss - IRS 160,200 P.V. of OA of 1 @ 6% for 3 pe
Interest Rate Swap Payable 160,200 IRS Payable
To record derivative liability

2019
PROBLEM 23-4 TENABLE COMPANY INC
2019 4% 2019
Jan 1 Cash 5,000,000 2% 2020
 Loans Payable 5,000,000 1% 2021
To record receipt of loan

Dec 31 Interest Expense 500,000

Cash 500,000
To record interest payment Principal Amount
10% Fixed Rate
Dec 31 Interest Rate Swap Receivable 464,000 14% Variable Rate - 2020
Unrealized Gain - IRS 464,000 Net Cash Settlement - RECEI
To record derivative asset P.V. of OA of 1 @ 14% for 3 p
2020 IRS Receivable
Dec 31 Interest Expense 700,000
Cash 700,000
To record interest payment

Dec 31 Cash 200,000

Interest Rate Swap Receivable 200,000 IRS Receivable - Dec 31, 201
To record receipt from speculator bank Cash Receipt - Dec 31, 2020
IRS Receivable - Dec 31, 202

Dec 31 Unrealized Gain - IRS 200,000 Principal Amount

Interest Expense 200,000 10% Fixed Rate
To record reclassification 12% Variable Rate - 2020
Net Cash Settlement - RECEI
Dec 31 Unrealized Gain - IRS 95,000 P.V. of OA of 1 @ 12% for 2 p
Interest Rate Swap Receivable 95,000 IRS Receivable - Dec 31, 202
To record decrease in IRS Rec Decrease in IRS Rec

2021
Dec 31 Interest Expense 600,000
Cash 600,000
To record interest payment

Dec 31 Cash 100,000 IRS Receivable - Dec 31, 202

Interest Rate Swap Receivable 100,000 Cash Receipt - Dec 31, 2021
To record receipt from speculator bank IRS Receivable - Dec 31, 202

Principal Amount
Dec 31 Unrealized Gain - IRS 100,000 10% Fixed Rate
Interest Expense 100,000 11% Variable Rate - 2020
To record reclassification Net Cash Settlement - RECEI
P.V. of Oa of 1 @ 11% for 1 p
Dec 31 Unrealized Gain - IRS 24,000 IRS Receivable - Dec 31, 202
Interest Rate Swap Receivable 24,000 Decrease in IRS Rec
To record decrease in IRS Rec
 2022
Dec 31 Interest Expense 550,000
Cash 550,000
To record interest payment

Dec 31 Cash 50,000

Interest Rate Swap Receivable 45,000
Unrealized Gain - IRS 5,000
To record receipt from speculator bank

Dec 31 Unrealized Gain - IRS 50,000

Interest Expense 50,000
To record reclassification

Dec 31 Loans Payable 5,000,000

Cash 5,000,000
To record payment of loan

PROBLEM 23-5 NOCTURNAL COMPANY

2019 INC
Jan 1 Cash 5,000,000 2% 2019
Loans Payable 5,000,000 3% 2020
To record receipt of loan 4% 2021

Dec 31 Interest Expense 400,000

Cash 400,000
To record interest payment
Principal Amount
Dec 31 Interest Rate Swap Receivable 249,000 8% Fixed Rate
Unrealized Gain - IRS 249,000 10% Variable Rate - 2020
To record derivative asset Net Cash Settlement - RECEI
2020 P.V. of OA of 1 @ 10% for 3 p
Dec 31 Interest Expense 500,000 IRS Receivable
Cash 500,000
To record interest payment

Dec 31 Cash 100,000

Interest Rate Swap Receivable 100,000 IRS Receivable - Dec 31, 201
To record receipt from speculator bank Cash Receipt - Dec 31, 2020
IRS Receivable - Dec 31, 202

Dec 31 Unrealized Gain - IRS 100,000 Principal Amount

Interest Expense 100,000 8% Fixed Rate
To record reclassification 11% Variable Rate - 2020
 Net Cash Settlement - RECEI
Dec 31 Interest Rate Swap Receivable 107,500 P.V. of OA of 1 @ 11% for 2 p
Unrealized Gain - IRS 107,500 IRS Receivable - Dec 31, 202
To record INcrease in IRS Rec iNcrease in IRS Rec

2021
Dec 31 Interest Expense 550,000
Cash 550,000
To record interest payment

Dec 31 Cash 150,000 IRS Receivable - Dec 31, 202

Interest Rate Swap Receivable 150,000 Cash Receipt - Dec 31, 2021
To record receipt from speculator bank IRS Receivable - Dec 31, 202

Principal Amount
Dec 31 Unrealized Gain - IRS 150,000 8% Fixed Rate
Interest Expense 150,000 12% Variable Rate - 2020
To record reclassification Net Cash Settlement - RECEI
P.V. of OA of 1 @ 12% for 1 p
Dec 31 Interest Rate Swap Receivable 71,500 IRS Receivable - Dec 31, 202
Unrealized Gain - IRS 71,500 Increase in IRS Rec
To record decrease in IRS Rec

2022
Dec 31 Interest Expense 600,000
Cash 600,000
To record interest payment

Dec 31 Cash 200,000

Interest Rate Swap Receivable 178,000
Unrealized Gain - IRS 22,000
To record receipt from speculator bank

Dec 31 Unrealized Gain - IRS 200,000

Interest Expense 200,000
To record reclassification

Dec 31 Loans Payable 5,000,000

Cash 5,000,000
To record payment of loan
incipal Amount 4,000,000
Fixed Rate
Variable Rate - 2020 2%
Net Cash Settlement - RECEIPT 80,000
P.V. of OA of 1 @ 14% for 1 perio 0.877
IRS Receivable 70,160

incipal Amount 4,000,000

Fixed Rate
Variable Rate - 2020 1%
Net Cash Settlement - PAYMENT 40,000
P.V. of OA of 1 @ 11% for 1 perio 0.901
IRS Receivable 36,040
incipal Amount 6,000,000
Fixed Rate
Variable Rate - 2020 3%
Net Cash Settlement - RECEIPT 180,000
P.V. of OA of 1 @ 13% for 1 perio 0.885
IRS Receivable 159,300
incipal Amount 3,000,000
Fixed Rate
Variable Rate - 2020 1%
Net Cash Settlement - RECEIPT 30,000
P.V. of OA of 1 @ 9% for 4 period 3.240
IRS Receivable 97,200

IRS Receivable - Dec 31, 2019 97,200

Cash Receipt - Dec 31, 2020 30,000
IRS Receivable - Dec 31, 2020 67,200
to be cancelled

incipal Amount 3,000,000

Fixed Rate
Variable Rate - 2020 2%
Net Cash Settlement - PAYMENT 60,000
P.V. of OA of 1 @ 6% for 3 period 2.670
IRS Payable 160,200

Net Cash Sett PV FAC DER. Asset ADJ

200,000 2.32 464,000 464,000 INC
100,000 1.69 169,000 95,000 DEC
 50,000 0.90 45,000 24,000 DEC

incipal Amount 5,000,000

Fixed Rate
Variable Rate - 2020 4%
Net Cash Settlement - RECEIPT 200,000
P.V. of OA of 1 @ 14% for 3 perio 2.320
IRS Receivable 464,000

IRS Receivable - Dec 31, 2019 464,000

Cash Receipt - Dec 31, 2020 200,000
IRS Receivable - Dec 31, 2020 264,000
before adjustment
incipal Amount 5,000,000
Fixed Rate
Variable Rate - 2020 2%
Net Cash Settlement - RECEIPT 100,000
P.V. of OA of 1 @ 12% for 2 perio 1.690
IRS Receivable - Dec 31, 2020 169,000
Decrease in IRS Rec 95,000

IRS Receivable - Dec 31, 2020 169,000

Cash Receipt - Dec 31, 2021 100,000
IRS Receivable - Dec 31, 2021 69,000
before adjustment
incipal Amount 5,000,000
Fixed Rate
Variable Rate - 2020 1%
Net Cash Settlement - RECEIPT 50,000
P.V. of Oa of 1 @ 11% for 1 perio 0.900
IRS Receivable - Dec 31, 2021 45,000
Decrease in IRS Rec 24,000
 Net Cash Sett PV FAC DER. Asset ADJ
100,000 2.49 249,000 249,000 INC
150,000 1.71 256,500 107,500 INC
200,000 0.89 178,000 71,500 INC

incipal Amount 5,000,000

Fixed Rate
Variable Rate - 2020 2%
Net Cash Settlement - RECEIPT 100,000
P.V. of OA of 1 @ 10% for 3 perio 2.490
IRS Receivable 249,000

IRS Receivable - Dec 31, 2019 249,000

Cash Receipt - Dec 31, 2020 100,000
IRS Receivable - Dec 31, 2020 149,000
before adjustment
incipal Amount 5,000,000
Fixed Rate
Variable Rate - 2020 3%
 Net Cash Settlement - RECEIPT 150,000
P.V. of OA of 1 @ 11% for 2 perio 1.710
IRS Receivable - Dec 31, 2020 256,500
iNcrease in IRS Rec 107,500

IRS Receivable - Dec 31, 2020 256,500

Cash Receipt - Dec 31, 2021 150,000
IRS Receivable - Dec 31, 2021 106,500
before adjustment
incipal Amount 5,000,000
Fixed Rate
Variable Rate - 2020 4%
Net Cash Settlement - RECEIPT 200,000
P.V. of OA of 1 @ 12% for 1 perio 0.890
IRS Receivable - Dec 31, 2021 178,000
Increase in IRS Rec 71,500
PROBLEM 24-1 TAGAYTAY COMPANY
2019
Jul 1 Entered into a FORWARD CONTRACT - Cash Flow Hedge Market Price - Dec 31, 2019
To buy trees 5,000
Purchase Price 1,500 Underlying Price
Derivative Asset - Dec 31, 20
Dec 31 Forward Contract Receivable 1,500,000
Unrealized Gain - Forward Contract 1,500,000
To record increase in market price 1,800

2020
Mar 1 Unrealized Gain - Forward Contrac 500,000 Market Price - Mar 1, 2020
Forward Contract Receivable 500,000
To record decrease in market price 1,700 Underlying Price
Derivative Asset - Mar 1, 20
Mar 1 Purchases 8,500,000 Derivative Asset - Dec 31, 20
Cash 8,500,000 Decrease in Der. Asset
To record purchases

Mar 1 Cash 1,000,000

Forward Contract Receivable 1,000,000
To record receipt fromspeculator bank

Mar 1 Unrealized Gain - Forward Contrac 1,000,000

Purchases 1,000,000
To record reclassification

PROBLEM 24-2 LAGUNA GRILL

2019
Sep 1 Entered into a FORWARD CONTRACT - Cash Flow Hedge Market Price - Dec 31, 2019
To buy tunas 100,000
Purchase Price 80 Underlying Price
Derivative Liab - Dec 31, 201
Dec 31 Unrealized Loss - Forward Contract 200,000
Forward Contract Payable 200,000
To record decrease in market price 78

2020
Jan 31 Unrealized Loss - Forward Contract 300,000 Market Price - Mar 1, 2020
Forward Contract Payable 300,000
To record decrease in market price 75 Underlying Price
Derivative Liab - Mar 1, 2020
Jan 31 Purchases 7,500,000 Derivative Liab - Dec 31, 201
 Cash 7,500,000 Decrease in Der. Asset
To record purchases

Jan 31 Forward Contract Payable 500,000

Cash 500,000
To record receipt payment to speculator bank

Jan 31 Purchases 500,000

Unrealized Loss - Forward Contract 500,000
To record reclassification

PROBLEM 24-3 QUEZON COMPANY

2019
Dec 1 Entered into a FUTURES CONTRACT - Cash Flow Hedge Market Price - Dec 31, 2019
To buy Soya beans 50,000 kilos
Purchase Price 150 Underlying Price
Derivative Asset - Dec 31, 20
Dec 31 Futures Contract Receivable 500,000
Unrealized Gain - Futures Contract 500,000
To record increase in market price 160

2020
Feb 1 Futures Contract Receivable 250,000 Market Price - Mar 1, 2020
Unrealized Gain - Futures Contract 250,000
To record increase in market price 165 Underlying Price
Derivative Asset - Mar 1, 20
Feb 1 Purchases 8,250,000 Derivative Asset - Dec 31, 20
Cash 8,250,000 Increase in Der. Asset
To record purchases

Feb 1 Cash 750,000

Futures Contract Receivable 750,000
To record receipt fromspeculator bank

Feb 1 Unrealized Gain - Futures Contract 750,000

Purchases 750,000
To record reclassification

PROBLEM 24-3 QUEZON COMPANY

2019
Dec 1 Entered into a FUTURES CONTRACT - Cash Flow Hedge Market Price - Dec 31, 2019
To buy Soya beans 50,000 kilos
 Purchase Price 150 Underlying Price
Derivative Liab - Dec 31, 201
Dec 31 Unrealized Loss - Futures Contract 250,000
Futures Contract Payable 250,000
To record decrease in market price 145

2020
Feb 1 Unrealized Loss - Futures Contract 0 Market Price - Mar 1, 2020
Futures Contract Payable 0
To record decrease in market price 145 Underlying Price
Derivative Liab - Mar 1, 2020
Feb 1 Purchases 7,250,000 Derivative Liab - Dec 31, 201
Cash 7,250,000 Decrease in Der. Asset
To record purchases

Mar 1 Futures Contract Payable 250,000

Cash 250,000
To record receipt payment to speculator bank

Mar 1 Purchases 250,000

Unrealized Loss - Futures Contract 250,000
To record reclassification

PROBLEM 24-4 BICOLANDIA COMPANY

2019
Nov 1 Entered into a FUTURES CONTRACT - Cash Flow Hedge Market Price - Dec 31, 2019
To buy grape juice 100,000 kilos
Purchase Price 50 Underlying Price
Derivative Asset - Dec 31, 20
Dec 31 Futures Contract Receivable 1,500,000
Unrealized Gain - Futures Contract 1,500,000
To record increase in market price 65

2020
Feb 1 Unrealized Gain - Futures Contract 500,000 Market Price - Mar 1, 2020
Futures Contract Receivable 500,000
To record decrease in market price 60 Underlying Price
Derivative Asset - Mar 1, 20
Feb 1 Purchases 6,000,000 Derivative Asset - Dec 31, 20
Cash 6,000,000 Increase in Der. Asset
To record purchases

Feb 1 Cash 1,000,000

Futures Contract Receivable 1,000,000
 To record receipt fromspeculator bank

Feb 1 Unrealized Gain - Futures Contract 1,000,000

Purchases 1,000,000
To record reclassification

PROBLEM 24-5 TAAL COMPANY

2019
Dec 1 Entered into a FUTURES CONTRACT - Cash Flow Hedge Market Price - Dec 31, 2019
To buy copper 25,000 pounds
Purchase Price 50 Underlying Price
Derivative Liab - Dec 31, 201
Dec 31 Unrealized Loss - Futures Contract 125,000
Futures Contract Payable 125,000
To record decrease in market price 45

2020
Jun 1 Unrealized Loss - Futures Contract 75,000 Market Price - Mar 1, 2020
Futures Contract Payable 75,000
To record decrease in market price 42 Underlying Price
Derivative Liab - Mar 1, 2020
Jun 1 Purchases 1,050,000 Derivative Liab - Dec 31, 201
Cash 1,050,000 Decrease in Der. Asset
To record purchases

Jun 1 Futures Contract Payable 200,000

Cash 200,000
To record receipt payment to speculator bank

Jun 1 Purchases 200,000

Unrealized Loss - Futures Contract 200,000
To record reclassification

PROBLEM 24-6 LEGASPI COMPANY

2019 Dec 1 Purchased a CALL OPTION - C
Dec 1 Call Option 50,000
Cash 50,000
To record purchase of call option

Dec 31 Call Option 250,000

Unrealized Gain - Call Option 250,000 Market Price - Dec 31, 2019
To record increase in market price
Underlying Price
2020 Derivative Asset - Dec 31, 20
 Jul 1 Call Option 450,000 Call Option - dec 1
Unrealized Gain - Call Option 450,000 Increase in Call Option
To record decrease in market price
Market Price - Mar 1, 2020
Jul 1 Purchases 5,250,000
Cash 5,250,000 Underlying Price
To record purchases Derivative Asset - Mar 1, 20
Derivative Asset - Dec 31, 20
Jul 1 Cash 750,000 Increase in Call Option
Call Option 750,000
To record receipt fromspeculator bank

Jul 1 Unrealized Gain - Call Option 700,000

Purchases 700,000
To record reclassification

PROBLEM 24-6 LEGASPI COMPANY

2019 Dec 1 Purchased a CALL OPTION - C
Dec 1 Call Option 50,000
Cash 50,000
To record purchase of call option

Dec 31 Call Option 250,000

Unrealized Gain - Call Option 250,000 Market Price - Dec 31, 2019
To record increase in market price
Underlying Price
2020 Derivative Asset - Dec 31, 20
Jul 1 Purchases 4,200,000 Call Option - dec 1
Cash 4,200,000 Increase in Call Option
To record purchases
Market Price - Jul 1, 2020
Jul 1 Loss on Call Option
Unrealized Gain - Call Option 250,000 Underlying Price
Call Option 300,000 Derivative Asset - Jul 1, 2020
To record reclassification

PROBLEM 24-7 NAGA COMPANY

2019 Dec 1 Purchased a CALL OPTION - C
Dec 1 Call Option 20,000
Cash 20,000
To record purchase of call option
Dec 31 Call Option 380,000
Unrealized Gain - Call Option 380,000 Market Price - Dec 31, 2019
To record increase in market price
Underlying Price
2020 Derivative Asset - Dec 31, 20
Jul 1 Unrealized Gain - Forward Contrac 200,000 Call Option - dec 1
Unrealized Gain - Call Option 200,000 Increase in Call Option
To record decrease in market price
Market Price - Mar 1, 2020
Jul 1 Purchases 5,600,000
Cash 5,600,000 Underlying Price
To record purchases Derivative Asset - Mar 1, 20
Derivative Asset - Dec 31, 20
Jul 1 Cash 600,000 Increase in Call Option
Call Option 600,000
To record receipt fromspeculator bank

Jul 1 Unrealized Gain - Call Option 580,000

Purchases 580,000
To record reclassification
Market Price - Dec 31, 2019
5,000 1,800 9,000,000
Underlying Price 1,500 7,500,000
Derivative Asset - Dec 31, 2019 1,500,000

Market Price - Mar 1, 2020

5,000 1,700 8,500,000
Underlying Price 0 7,500,000
Derivative Asset - Mar 1, 2020 1,000,000
Derivative Asset - Dec 31, 2019 1,500,000
Decrease in Der. Asset -500,000

Market Price - Dec 31, 2019

100,000 78 7,800,000
Underlying Price 80 8,000,000
Derivative Liab - Dec 31, 2019 -200,000

Market Price - Mar 1, 2020

100,000 75 7,500,000
Underlying Price 0 8,000,000
Derivative Liab - Mar 1, 2020 -500,000
Derivative Liab - Dec 31, 2019 -200,000
Decrease in Der. Asset -300,000

Market Price - Dec 31, 2019

50,000 160 8,000,000
Underlying Price 150 7,500,000
Derivative Asset - Dec 31, 2019 500,000

Market Price - Mar 1, 2020

50,000 165 8,250,000
Underlying Price 0 7,500,000
Derivative Asset - Mar 1, 2020 750,000
Derivative Asset - Dec 31, 2019 500,000
Increase in Der. Asset 250,000

Market Price - Dec 31, 2019

50,000 145 7,250,000
Underlying Price 150 7,500,000
Derivative Liab - Dec 31, 2019 -250,000

Market Price - Mar 1, 2020

50,000 145 7,250,000
Underlying Price 0 7,500,000
Derivative Liab - Mar 1, 2020 -250,000
Derivative Liab - Dec 31, 2019 -250,000
Decrease in Der. Asset 0

Market Price - Dec 31, 2019

100,000 65 6,500,000
Underlying Price 50 5,000,000
Derivative Asset - Dec 31, 2019 1,500,000

Market Price - Mar 1, 2020

100,000 60 6,000,000
Underlying Price 0 5,000,000
Derivative Asset - Mar 1, 2020 1,000,000
Derivative Asset - Dec 31, 2019 1,500,000
Increase in Der. Asset -500,000
Market Price - Dec 31, 2019
25,000 45 1,125,000
Underlying Price 50 1,250,000
Derivative Liab - Dec 31, 2019 -125,000

Market Price - Mar 1, 2020

25,000 42 1,050,000
Underlying Price 0 1,250,000
Derivative Liab - Mar 1, 2020 -200,000
Derivative Liab - Dec 31, 2019 -125,000
Decrease in Der. Asset -75,000

Purchased a CALL OPTION - Cash Flow Hedge

To buy cottons (kilos) 150,000
Purchase Price 30

Market Price - Dec 31, 2019

150,000 32 4,800,000
Underlying Price 30 4,500,000
Derivative Asset - Dec 31, 2019 300,000
Call Option - dec 1 50,000
Increase in Call Option 250,000

Market Price - Mar 1, 2020

150,000 35 5,250,000
Underlying Price 0 4,500,000
Derivative Asset - Mar 1, 2020 750,000
Derivative Asset - Dec 31, 2019 300,000
Increase in Call Option 450,000

Purchased a CALL OPTION - Cash Flow Hedge

To buy cottons (kilos) 150,000
Purchase Price 30

Market Price - Dec 31, 2019

150,000 32 4,800,000
Underlying Price 30 4,500,000
Derivative Asset - Dec 31, 2019 300,000
Call Option - dec 1 50,000
Increase in Call Option 250,000

Market Price - Jul 1, 2020

150,000 28 4,200,000
Underlying Price #REF! 4,500,000
Derivative Asset - Jul 1, 2020 -300,000
OUT OF THE MONEY
DO NOT EXERCISE
Purchase Price - current

Purchased a CALL OPTION - Cash Flow Hedge

To buy raw materials (unit 200,000
Purchase Price 25
Market Price - Dec 31, 2019
200,000 27 5,400,000
Underlying Price 25 5,000,000
Derivative Asset - Dec 31, 2019 400,000
Call Option - dec 1 20,000
Increase in Call Option 380,000

Market Price - Mar 1, 2020

200,000 28 5,600,000
Underlying Price 0 5,000,000
Derivative Asset - Mar 1, 2020 600,000
Derivative Asset - Dec 31, 2019 400,000
Increase in Call Option 200,000