Prepare the shareholders' equity section of BEST SCHOOL's statement of financial position as of December 31, 2022. Assume net profit is P500,000 for 2022, and that the corporation law requires a bonus issue to be accounted for by a reclassification from retained earnings to issued capital of an amount equal to the fair value of the additional shares issued.
On January 1, 2022, BEST SCHOOL CORP. had the following account balances in its shareholders' equity accounts.
Ordinary share capital, P1 par, 250,000 shares issued 250,000
Additional issued capital, ordinary 500,000
Additional issued capital, preference 100,000
Treasury shares, at cost, 5,000 shares 25,000
During 2022, BEST SCHOOL CORP. had several transactions relating to ordinary shares.
January 15: Declared a property dividend of 100,000 shares of Slug Company (book value P10 per share, fair value P9 per share).
February 17: Distributed the property dividend.
April 10: A 2-for-1 share split was declared and distributed on outstanding ordinary shares. The fair value of the shares was P4 on this date.
July 18: Declared and distributed a 3% bonus issue on outstanding ordinary shares. The fair value is P5 per share on this date.
December 1: Declared a 50 cents per share cash dividend on the outstanding ordinary shares.
December 20: Paid the cash dividend.
Required:
Prepare the shareholders' equity section of BEST SCHOOL's
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