AP-5901_SHE - PROBLEM NO. 1 - Conviction Corporation...

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Question Nos. 1, 3 to 5 - B Authorized common stock 4,000,000 Unissued common stock (800,000) Common stock issued 3,200,000 1 Subscribed common stock 480,000 Subscriptions receivable (120,000) 360,000 Additional paid-in capital Donated capital 800,000 Gain on sale of treasury stock 80,000 Premium on capital stock 320,000 Stock warrants outstanding 200,000 1,400,000 Retained earnings Appropriated for sinking fund 400,000 Appropriated for treasury stock 144,000 Total appropriated retained earnings 544,000 3 Unappropriated (P720,000 - P144,000) 576,000 1,120,000 Revaluation surplus 800,000 Total 6,880,000 Less : Treasury stock (144,000) Net unrealized loss on AFS (96,000) (240,000) Total stockholders equity 6,640,000 5 Question No. 2 - B Common stock issued 3,200,000 Subscribed common stock 480,000 Legal capital 3,680,000 AP-5801 PROBLEM NO. 1 - Conviction Corporation
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2005 12.31.04 Transactions 12.31.05 Common stock 1,125,000 2/1 20,250 1,275,075 (1) C 7/31 111,825 10/1 18,000 Additional paid in capital 10,800,000 2/1 (33,750) 12,629,175 (2) A 2/1 249,750 4/1 12,000 7/31 1,379,175 10/1 (12,000) 10/1 234,000 12/1 (191,250) 12/1 191,250 Retained earnings 720,000 12/31 375,750 1,095,750 (3) B Total stockholders' equity 12,645,000 15,000,000 (4) C Journal entries for 2005 2/1 Cash (6,750 options x P35) 236,250 APIC-stock options (6,750 x P5) 33,750 Common stock (6,750 shares x P3) 20,250 APIC - excess over par 249,750 4/1 Cash 3,000,000 Bond discount [P3,000,000 - (3,000 x P996)] 12,000 Bonds payable 3,000,000 APIC-stock warrants 12,000 7/1 Memorandum: Issued rights to shareholders permitting holder to acquire for a 30-day period one share at P40 with every 10 rights submitted —a maximum of 38,175 shares (381,750 shares ÷ 10). 7/31 Cash {[38,175 - (9,000/10)] x P40} 1,491,000 Common stock (37,275 shares x P3) 111,825 APIC - excess over par 1,379,175 10/1 Cash (3,000 x 2 x P40) 240,000 APIC-stock warrants 12,000 Common stock (3,000 shares x 2 x P3) 18,000 APIC - excess over par 234,000 12/1 APIC-stock options [P225,000 - (6,750 x P5)] 191,250 APIC - expired stock options 191,250 12/31 Income summary 375,750 Retained earnings 375,750 PROBLEM NO. 2 - Determination, Inc.
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2005 12.31.04 Transactions 12.31.05 Preferred stock 1,800,000 1,800,000 Common stock 5,150,000 a (150,000) 6,450,000 (11) C c 1,050,000 d 400,000 APIC - Preferred 90,000 90,000 APIC - Common 3,500,000 a (120,000) 4,880,000 (12) C c 1,260,000 d 240,000 Retained earnings 4,000,000 b (750,000) 5,395,000 (14) D e (180,000) g (275,000) h 2,600,000 Treasury stock (270,000) a 270,000 - Net unrealized loss on AFS (245,000) f 110,000 (135,000) Total stockholders' equity 14,025,000 18,480,000 (15) B Journal entries for 2005 a Common stock (30,000 shares x P5) 150,000 APIC-common 120,000 Treasury stock 270,000 b Retained earnings
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AP-5901_SHE - PROBLEM NO. 1 - Conviction Corporation...

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