i have the answer but don\'t have the solution. :( please help PROBLEM NO. 2 Fol

Question

i have the answer but don't have the solution. :( please help

PROBLEM NO. 2 Following is the stockholders' equity section of Tenacity Corporation's balance sheet at December 31, 2004 Common stock, P10 par value; authorized 1,500,000 shares; issued and outstanding 900,000 shares Additional paid-in capital Retained earnings Total stockholders' equity P9,000,000 750,000 2,700,000 Transactions during 2005 and other information relating to the stockholders' equity accounts were as follows: .On January 26, Tenacity reacquired 75,000 shares of its common stock for P11 per share .On April 4, Tenacity sold 45,000 shares of its treasury stock for P14 per share. .On June 1, Tenacity declared a cash dividend of P1 per share, payable on July 15, 2005 to stockholders of record on July 1, 2005. AP-5901 Page 2 of 7 .On August 15, each stockholder was issued one stock right for each share held to purchase two additional shares of stock for P12 per share. The rights expire on October 31, 2005. .On September 30, 150,000 stock rights were exercised when the market value of the stock was P12.50 per share .On November 2, Tenacity declared a two for one stock split-up and charged the par value of the stock from P10 to P5 per share. On November 20, shares were issued for the stock split. .On December 5, 60,000 shares were issued in exchange for a secondhand equipment. It originally cost P600,000, was carried by the previous owner at a book value of P300,000, and was recently appraised at P390,000 . Net income for 2005 was P720,000 QUESTIONS Based on the above and the result of your audit, determine the following as of December 31, 2005: 1. Common stock 2. Additional paid-in capital 3. Unapproriated retained earnings 4. Total stockholders' equity a. P12,600,000 b. P10,800,000 c. P10,050,000 d. P12,300,000 a. P1,485,000 a. P2,550,000 a. P16,425,000 b. P14,295,000 C. P16,095,000 d. P16,065,000 b. P1,575,000 C. P3,825,000 d. P1,275,000 b. P2,422,500 C. P2,220,000 d. P2,190,000

Explanation / Answer

PREPARE T-ACCOUNTS of Common stock, Additional paid in capital, Retained Earning and Treasury stocks COMMON STOCK Additional paid in Capital Date Debit Credit Date Debit Credit January1, 2005 Beginnig balance(900000shares)            9,000,000 January1, 2005 Beginning balance            750,000 Septr 30, 2005 Cash (right issue)(300000 shares)            3,000,000 April 4, 2005 Cash            135,000 (14-11)*45000 November2,2005 Stock split(number outstanding 24000000)P5 each (9000000+3000000)*2 Septr 30, 2005 Cash (right issue)            600,000 (300000*2) December5, 2005 Equipment(60000 shares)                300,000 (60000*5) December5, 2005 Equipment              90,000 (390000-300000) December31, 2005 Ending Balance          12,300,000 December31, 2005 Ending Balance        1,575,000 Retained Earnings TREASURY STOCK Date Debit Credit Date Debit Credit January1, 2005 Beginning Balance            2,700,000 January 26,2005 Cash (75000 shares)            825,000 (11*75000) June 1, 2005 Dividend payable 870000 April 4, 2005 Cash(45000shares)            495,000 (11*45000) December 31 Net Income                720,000 December 31 Ending Balance            330,000 December 31 Ending Balance            2,550,000 Dividend Payable Date Debit Credit June 1, 2005 Retained earning 870000 (900000-75000+450000)*1 ANSWER 1 Common stock Ending balance    12,300,000 (d) 2 Additional Paid in capital ending balance      1,575,000 (b) 3 Unappropriated retained earnings      2,550,000 (a) 4 Total Stockholders Equity: Common stock    12,300,000 Additional Paid in Capital      1,575,000 Retained earning      2,550,000 Treasury stock -330000 Total Stockholders equity    16,095,000 .(c) (12300000+1575000+2550000-330000)

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