What amount should be reported in the notes

Assignment Help Financial Accounting

Reference no: EM132792164

Question - Emerald Company showed the following shareholders' equity on January 1, 2020.

Share capital, 1,500,000

Shares 1,500,000

Share premium 15,000,000

Retained Earnings 8,100,000

Treasury shares, 100,000 at cost (900,000)

All of the outstanding and treasury shares were originally issued in 2018 for P11 per share.

The treasury shares are reacquired on March 31, 2019.

During 2020, the following events or transactions occurred related to shareholder's equity:

a. Feb. 15 - Issued 400,000 shares for P12.50 per share.

b. June 15 - Declared cash dividend of P0.20 per share to shareholders of record on April 1 and payable on April 15. This was the first dividend declared.

c. Sept. 15 - The president retired. The entity purchased from the retiring president 100,000 shares for P13.00 per share which was equal to market value on this date. These shares were canceled.

d. Dec. 15 - Declared cash dividend of P0.20 per share to shareholders of record on January 2, 2021 and payable on January 15, 2021.

e. On December 31, 2020, the entity is being sued by two separate parties for patent infringement.

The management and legal counsel share the following opinion regarding the suits:

Suit Likelihood of losing the suit Estimated loss

#1 Reasonable possible 600,000

#2 Probable 400,000

1. What is the increase in share premium arising from the issuance of 400,000 shares on February 15?

a. 4,000,000 b. 5,000,000 c. 4,600,000 d. 400,000

2. What is the decrease in share premium arising from the retirement of 100,000 shares on September 15?

a. 1,300,000 b. 1,200,000 c. 1,000,000 d. 100,000

3. The entity decided to appropriate retained earnings for all loss contingencies that are not properly accruable by a charge to expense. How much of loss contingencies should be appropriated by a charge to unappropriated retained earnings?

a. 1,000,000 b. 600,000 c. 400,000 d. 500,000

4. What amount of cash dividend should be charged against unappropriated retained earnings in 2020?

a. 700,000 b. 680,000 c. 360,000 d. 340,000

5. What amount should be reported in the notes to financial statements as restriction on retained earnings because of acquisition of treasury shares?

a. 200,000 b. 900,000 c. 1,200,000 d. 1,300,000

Reference no: EM132792164

Questions Cloud

What is the total cost of goods transferred out using fifo : All materials and 60 percent of labor and overhead were added in the prior period. What is the total cost of goods transferred out using FIFO

What type of appeal did messages use to capture attention : What type of appeal did the messages use to capture attention? Did you or will you buy the product because of the ad? Explain why or why not.

Nlrb certification procedures : Some union advocates have suggested that NLRB certification procedures are so cumbersome that unions would be better off if the LMRA was repealed.

Implications for resilience in transitional age youth : Discuss takeaways from the above readings while incorporating things such as the current state of psychology and cultural psychology.

What amount should be reported in the notes : What amount should be reported in the notes to financial statements as restriction on retained earnings because of acquisition of treasury shares

Do feel that marketing including advertising of healthcare : Do you feel that Marketing, including Advertising, of Healthcare Services, products including prescription (Rx) and over-the-counter (OTC) "drugs"

Why is random assignment important in research : 1. Discuss the four important issues established by the American Psychological Association (APA) for ethical research.

Strategic planning at branch-smith printing division : Analyze the Strategic Planning at Branch-Smith Printing Division. What are some of the unique features associated to their Strategic Planning?

Identify the key ethical dilemma facing stephen in scenario : Identify the key ethical dilemma facing Stephen in the scenario above. Choose and Justify the Best course of action that Stephen should undertake

User Account

All Pages