e; 10,000 shares authorized; 6,000 shares issued and outstanding
You were engaged by Black Clover Corporation, a publicly held company whose shares are traded on the Philippine Stock Exchange, to conduct an audit of tis 20x2 financial statements. You were told by the company’s controller that there were numerous equity transactions that took place in 20x2. The shareholders’ equity accounts at December 31, 20x1, had the following balances:
shares authorized; 6,000 shares issued and outstanding P600,000
Ordinary share capital, P1 par value, 600,000 shares authorized;
360,000 shares issued and outstanding 360,000
Share premium 720,000
Total shareholders’ equity P2,004,000
You summarized the following equity transactions during 20x2 and other information relating to the shareholders’ equity in your working papers as follows:
• January 6, 20x2 Issued 14,000 shares in exchange for land. On the date issued, the shares had a market price of P16.50 per share. The land had a carrying value of P126,000.
• January 31, 20x2 Sold 750, P1,000, 12% bonds due January 31, 2x12, at 98 with one detachable warrant attached to each bond. Interest is payable annually on January 31. The fair
• February 22, 20x2 Purchased 4,500 of its own ordinary shares to be held as treasury shares for P24 per share.
• February 28, 20x2 Subscriptions for 12,600 ordinary shares were received at P26 share, payable 50% down payment and the balance by March 15.
• March 15, 20x2 The balance due on 10,800 shares was received and those shares were issued. The subscriber who defaulted on the 1,800 remaining shares forfeited the down payment in accordance with the subscription agreement.
• August 30, 20x2 Reissued 1,800 treasury shares for P20 per share.
• September 14, 20x2 There were 567 warrants detached from the bonds and exercised.
• November 30, 20x2 Declared a cash dividend of P0.50 per share to ordinary shareholders of record on December 15, 20x2. The dividend was paid on December 30, 20x2
• December 15, 20x2 Declared the required annual cash dividends on preference shares for 20x2. The dividend was paid on January 15, 20x3.
• January 8, 20x3 Before closing the accounting records of 20x2, Black Clover became aware that no depreciation had been recorded for a machine purchased on July 1, 20x1. The machine was properly capitalized at P288,000 and had an estimated useful life of eight (8) years when purchased. the appropriate correcting entry was recorded on the same date.
• The adjusted net income for 20x2 was P252,000
REQUIRED: Determine the following balances for December 31, 20x2:
10. Ordinary share capital ____________
11. Total share premium ____________
12. Retained earnings before appropriation of treasury shares ____________
13. Unappropriated retained earnings ____________
14. Total shareholders’ equity ____________
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