On December 31, 2020, COVIVAX Company’s board of directors canceled 20,000 shares of P25 par value ordinary share held in treasury at an average cost of P130 per share. Before recording the cancelation of the treasury share. COVIVAX had the following balances in its shareholders’ equity: ordinary share (250,000 shares originally issued at P55)6,250,000Share Premium7,500,000Retained earnings5,000,000Treasury share, at cost2,600,000 Your audit shows that in its statement of financial position at December 31, 2020, COVIVAX reported an ordinary share outstanding of P5,750,000. As an auditor, what should be the correct ordinary share outstanding?Answer in figures, ignore the peso sign.

In accounting treatment for the cancellation of treasury stocks that were initially reported using…

Answered: On December 31, 2020, COVIVAX Company’s…

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter14: Corporation Accounting

Section: Chapter Questions

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On December 31, 2020, COVIVAX Company’s board of directors canceled 20,000 shares of P25 par value ordinary share held in treasury at an average cost of P130 per share. Before recording the cancelation of the treasury share. COVIVAX had the following balances in its shareholders’ equity:

ordinary share (250,000 shares originally issued at P55)	6,250,000
Share Premium	7,500,000
Retained earnings	5,000,000
Treasury share, at cost	2,600,000

Your audit shows that in its statement of financial position at December 31, 2020, COVIVAX reported an ordinary share outstanding of P5,750,000.

As an auditor, what should be the correct ordinary share outstanding?

Answer in figures, ignore the peso sign.

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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