23-1

1 Retained Earnings
Retained Earnings appropriated for bond redem

2 Bonds Payable
Cash

3 Retained Earnings appropriated for bond redemption

Retained Earnings

4 Retained Earnings (30% x 250,000 x P10)

Share Capital

23-2
1 Retained Earnings
Retained Earnings appropriated for plant expan

2 Retained Earnings appropriated for plant expansion

Retained Earnings

3 Retained Earnings appropriated for plant expansion

Retained Earnings

23-3
1 Treasury shares (6,000 sh x P90)
Cash

2 Cash (3,000 sh x P120)

Treasury Shares (3,000 sh x P90 cost)
Share premium - treasury shares

3 Memo - issued 47,000 rights to enable shareholders to pur

4 Cash (10,000 x 2 = 20,000 sh x P140)

Share Capital (20,000 sh x P100 par)
Share premium

5 Outstanding (50,000 sh + 20,000 sh)

 Less: Treasury shares
Issued
x Dividend per share
Total cash dividend

Retained Earnings
Dividend Payable

6 Share Capital (2,000 sh x P100par)

Share premium ((2,000 sh / 50,000 sh) x 400,000)
Treasury shares (2,000 sh x P90 cost)
Share premium - treasury shares

7 Income Summary
Retained Earnings

8 Retained Earnings (1,000 sh x P90 cost)

Retained Earnings appropriated for treasury sha

Statement of Changes in Equity

Year-Ended December 31, 2021

Share
Capital
Balances - January 01 5,000,000
Acquisition of TS - 6,000 shares
Reissuance of TS - 3,000 shares
Retirement of TS - 2,000 shares (200,000)
Issuance of 20,000 shares 2,000,000
Dividend declared
Net income
Appropriation for TS
Balances - December 31 6,800,000

Share Capital
Share premium
 Original Issuance
Treasury Shares
Retained Earnings
Unappropriated
Appropriated for Treasury shares
Treasury Shares
Total Shareholders' Equity

23-4
1 Treasury Shares (5,000 sh x P110)
Cash

2 Cash (3,000 sh x P140)

Treasury Shares (3,000 sh x P110)
Share premium - treasury shares

3
Outstanding
Treasury shares (5,000 - 3,000)
Issued
x Dividend per share
Total dividend

Retained Earnings
Dividend Payable

4 Memo - issued 120,000 new shares with par value of P50 a

with par value of P100. Treasury shares - 4,000 sh

5 Equipment
Share Capital (4,000 x P50 par)
Share premium

6 Income summary
Retained Earnings

7 Retained Earnings (550,000 - 330,000)

 Retained Earnings appropriated for treasury sha

23-5
1 Cash (100,000 sh x P54)
Preference Share Capital (100,000 x P50)
Share Premium - preference shares

2 Treasury shares (10,000 sh x P32)

Cash

3 Cash (250,000 sh x P34)

Ordinary share capital (250,000 x P20)
Share premium - ordinary shares

4
Outstanding (1,000,000 + 250,000)
Less: Treasury shares
Issued
x Dividend per share
Total Dividend

Retained Earnings
Dividend Payable

5 Cash (5,000 sh x P42)

Treasury Shares (5,000 sh x P32 cost)
Sare premium - treasury shares

6 Retained Earnings (100,000 sh x P50 par x 9%)

Dividend Payable

7 Income Summary
Retained Earnings

8 Retained Earnings (320,000 - 160,000)

Retained Earnings appropriated for treasury sha
23-6
1 Ordinary share capital (30,000 sh x P5 par)
Share premium - ordinary (30,000 sh x ((P10 issuance pric
Retained Earnings (balancing)
Treasury shares

2
Outstanding (5,150,000 / P5)
Less: Retired shares
Issued
/ 100 shares
Digos shares distributed as property dividend
x FV at the time of declaration date
Total Dividend

Retained Earnings
Dividend Payable

(no need to adjust the amount of equity investment becau

Retained Earnings (2,000,000 x 10%)

3 Dividend Payable

4 Retained Earnings
Income Tax Payable
Rent income

5 Income Summary
Retained Earnings

Retained Earnings, Jan 01

Retirement of tresury shares
Property dividend
Preference dividend
Prior period error
 Net Income
Retained Earnings, Dec 31

23-7
1 Retained Earnings
Inventory (3,250,000 - 3,000,000)

2 Retained Earnings
Property, Plant, and Equipment

3 Share Capital ((P10-P5) x 350,000 sh)

Share premium

Share premium
Retained Earnings (450,000 + 250,000 + 1,500,000

23-8
1 Retained Earnings
Inventory
Accumulated Depreciation
Goodwill

2 Share premium
Retained Earnings

3 Share Capital
Retained Earnings

Total deficit (8,000,000 + 7,000,000)

Charged against share premium
Charged against capital

23-9
1 Retained Earnings
Inventory

2 Accumulated Depreciation
 Note Payable
Retained Earnings
Equipment

3 Retained Earnings
Goodwill

4 Mortgage Payable
Preference Share Capital (40,000 sh x P100)
Share Premium - preference

5 Ordinary share capital ((P100 - P20) x 50,000 sh)

Share premium

Share premium -
Retained Earnings (2,800,000+150,000+300,000+1

23-11 A
The preference dividends in arrears do not necessarily req
retained earnings must be appropriated to the extent of th

23-12 C
Remaining cost of treasury shares (5,000 x P120)

23-13 A
Only the retained earnings appropriated for the construct
appropriated for the construction of office building should
the building is already completed.

The cash restriction for the retirement of bonds payable do

23-14 A

Retained Earnings, Jan 01

Share Dividend ((200,000 - 10,000) x P 5 x 30%)
Appropriation for treasury Shares (10,000 sh x P30)
Cash Dividend
 Net income
Unappropriated RE, Dec 31

* Outstanding
Share dividend (200,000 x 30%)
Treasury shares (10,000 x 1.30)
Issued
x dividend per share
Total Dividend

23-15 A

Retained Earnings, Jan 01

Net income
Appropriated for treasury shares (40,000 x P20)
Unappropriated retained earnings, Dec 31

23-16 A
Net income - 2018 - 2020 (1,500,000 + 2,500,000 + 3,000,000
Dividend declared - 2019 and 2020 (1,000,000 + 1,000,000)
RE, Jan 01
Net income for 2021 (6,000,000 x 75%)
Prior period adjustment (500,000 x 75%)
Cumulative decrease (1,000,000 x 75%)
Dividend declared - 2021
RE, Dec 31

23-17 A

Retained Earnings, Jan 01

Prior period error - overdepreciation (500,000 x 75%)
Net income for 2021
Cash dividend - preference
Cash dividend - ordinary
Retained Earnings, Dec 31
23-18 B

23-19 D

23-20 C

Inventory is already recorded at Fair value. No need for adjustin

Retained Earnings
Property, plant, and Equipment (12M - 8M)

Share Capital ((P10 - P5) x 700,000 sh)

Share Premium

Share Premium
Retained Earnings (900,000 + 4,000,000)

Share Capital (7,000,000 - 3,500,000)

Share premium (1,600,000 + 3,500,000 - 4,900,000)
Total SHE after quasi-reorganization

23-21 B

23-22 A

23-23 CCBAB

23-24 DDCCBBDDBB

23-25 CCACC
 200,000
propriated for bond redemption 200,000

1,000,000
1,000,000

d for bond redemption 1,000,000

1,000,000

750,000
750,000

5,000,000
propriated for plant expansion 5,000,000

d for plant expansion 3,000,000

3,000,000

d for plant expansion 2,000,000

2,000,000

540,000
540,000

360,000
0 sh x P90 cost) 270,000
ury shares 90,000

enable shareholders to purchase two shares at P140 per share plus one right

2,800,000
sh x P100 par) 2,000,000
800,000

70,000
 3,000
67,000
20
1,340,000

1,340,000
1,340,000

200,000
00 sh) x 400,000) 16,000
0 sh x P90 cost) 180,000
ury shares 36,000

540,000
540,000

90,000
propriated for treasury shares 90,000

f Changes in Equity
d December 31, 2021

Share Retained Treasury

Premium Earnings Shares
400,000 1,500,000
540,000
90,000 (270,000)
20,000 (180,000)
800,000
(1,340,000)
540,000
(90,000)
1,310,000 610,000 90,000

6,800,000
 1,184,000
126,000 1,310,000

610,000
90,000 700,000
(90,000)
8,720,000

550,000
550,000

420,000
0 sh x P110) 330,000
ury shares 90,000

60,000
2,000
58,000
20
1,160,000

1,160,000
1,160,000

res with par value of P50 as a result of 2 for 1 split of 60,000 original shares
Treasury shares - 4,000 shares

260,000
200,000
60,000

1,730,000
1,730,000

220,000
propriated for treasury shares 220,000

5,400,000
tal (100,000 x P50) 5,000,000
erence shares 400,000

320,000
320,000

8,500,000
l (250,000 x P20) 5,000,000
nary shares 3,500,000

1,250,000
10,000
1,240,000
2
2,480,000

2,480,000
2,480,000

210,000
0 sh x P32 cost) 160,000
ry shares 50,000

P50 par x 9%) 450,000

450,000

3,500,000
3,500,000

160,000
propriated for treasury shares 160,000
h x P5 par) 150,000
00 sh x ((P10 issuance price - P5 par) 150,000
100,000
400,000

1,030,000
(30,000)
1,000,000
100
perty dividend 10,000
90
900,000

900,000
900,000

f equity investment because the carrying amount is lower than the fair value)

200,000
200,000

750,000
250,000
1,000,000

6,000,000
6,000,000

4,000,000
(100,000)
(900,000)
(200,000)
(750,000)
 6,000,000
8,050,000

250,000
3,000,000) 250,000

1,500,000
quipment 1,500,000

1,750,000
1,750,000

2,200,000
0,000 + 250,000 + 1,500,000 2,200,000

7,000,000
2,000,000
4,000,000
1,000,000

5,000,000
5,000,000

10,000,000
10,000,000

15,000,000
(5,000,000)
10,000,000

150,000
150,000

1,200,000
 500,000
300,000
2,000,000

1,200,000
1,200,000

4,200,000
tal (40,000 sh x P100) 4,000,000
200,000

P20) x 50,000 sh) 4,000,000

4,000,000

4,450,000
800,000+150,000+300,000+1,200,000) 4,450,000

ears do not necessarily require appropriation of retained earnings. Legally,

opriated to the extent of the cost of treasury shares.

es (5,000 x P120) 600,000

ropriated for the construction of new plant should be reported. The retained earnings
on of office building should be recerted to unapppropriated retained earnings because

ement of bonds payable does not necessarily require an appropriation of retained earnings

2,800,000
00) x P 5 x 30%) (285,000)
res (10,000 sh x P30) (300,000)
(2,470,000) *
 3,000,000
2,745,000

200,000
60,000
(13,000)
247,000
10
2,470,000

3,000,000
600,000
es (40,000 x P20) (800,000)
ngs, Dec 31 2,800,000

000 + 2,500,000 + 3,000,000) 7,000,000

020 (1,000,000 + 1,000,000) (2,000,000)
5,000,000
4,500,000
(375,000)
(750,000)
(2,000,000)
6,375,000

4,500,000
ation (500,000 x 75%) 375,000
4,000,000
(1,000,000)
(2,000,000)
5,875,000
ir value. No need for adjusting entry

4,000,000
quipment (12M - 8M) 4,000,000

3,500,000
3,500,000

4,900,000
0,000 + 4,000,000) 4,900,000

3,500,000
00,000 - 4,900,000) 200,000
3,700,000