Chapter 03

Shareholders’ Equity – Composition of Equity

Legal Capital
1) The following were lifted from the equity section of an entity’s statement of financial position showed the following
information:

Ordinary shares, P200 par value 3,200,000

6% Preference shares, P400 par value 800,000
Share premium – ordinary shares 1,200,000
Share premium – preference shares 200,000
Subscribed ordinary shares 400,000
Subscription receivable 200,000
Retained earnings 1,600,000
How much is the legal capital of the entity?
A. 5,600,000
B. 5,200,000
C. 4,400,000
D. 4,200,000

Total Shareholders’ Equity & Contributed Capital

Numbers 2 and 3
Shokt Company’s adjusted balance at December 31, 2021, includes the following account balances:

8% Preference stock (preference shares), P100 par 900,000

Common stock (ordinary shares), P3 par 500,000
Subscribed common stock (subscribed ordinary shares) 400,000
Subscription receivable (on ordinary shares) 150,000
Additional paid-in capital (share premium) – common stocks 300,000
Additional paid-in capital (share premium) – preferred stock 250,000
Retained earnings: appropriated for uninsured earthquake losses 100,000
Retained earnings: unappropriated 200,000
Treasury stock at cost 70,000
Net unrealized loss on investment measured at fair value through other comprehensive income 40,000
Net unrealized gain on foreign currency translation adjustment 25,000
Revaluation surplus 280,000
2) The amount that Shokt Company should report as total stockholders’ equity in its December 31, 2021 balance
sheet is
A. 2,695,000
B. 2,775,000
C. 2,995,000
D. 2,970,000

3) What is Shokt Company’s contributed capital?

A. 2,200,000
B. 2,130,000
C. 2,350,000
D. 2,280,000
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FAR by: John Bo S. Cayetano, CPA, MBA Page 1 of 1