Gary Company reported the following amounts in the equity section of its Dec. 31, 2020, statement of financial position. Share capital - Preference. 8%, P100 par (10,000 shares authorized, 2,000 shares issued) P200,000 Share capital-ordinary, P5 par (100,000 shares authorized, 20,000 shares issued) 100,000 Share premium 125,000 Retained earnings 450,000 Total 875,000 During 2021, Gary took part in the following transactions concerning equity. Paid the annual 2020 P8 per share dividend on preference shares and a P2 per share dividend on ordinary shares. These dividends had been declared on Dec. 31, 2020. Purchase 2,700 shares of its own outstanding ordinary shares for P40 per share. Gary uses the cost method. Reissued 700 treasury shares for land valued at P30,000. Issued 500 preference shares at P105 per share. Declared a 10% share dividend on the outstanding ordinary shares when the shares are selling for P45 per share. Issued the share dividend. Declared the annual 2021 P8 per share dividend on preference shares and the P2 per share dividend on ordinary shares. These dividends are payable in 2022. Profit for 2021 is P330,000. Required: Prepare a statement of changes in equity for the year ended Dec. 31, 2021.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Gary Company reported the following amounts in the equity section of its Dec. 31, 2020, statement of financial position.

Share capital - Preference. 8%, P100 par (10,000 shares authorized, 2,000 shares issued) P200,000

Share capital-ordinary, P5 par (100,000 shares authorized, 20,000 shares issued) 100,000

Share premium 125,000

Retained earnings 450,000

Total 875,000

During 2021, Gary took part in the following transactions concerning equity.

Paid the annual 2020 P8 per share dividend on preference shares and a P2 per share dividend on ordinary shares. These dividends had been declared on Dec. 31, 2020.
Purchase 2,700 shares of its own outstanding ordinary shares for P40 per share. Gary uses the cost method.
Reissued 700 treasury shares for land valued at P30,000.
Issued 500 preference shares at P105 per share.
Declared a 10% share dividend on the outstanding ordinary shares when the shares are selling for P45 per share.
Issued the share dividend.
Declared the annual 2021 P8 per share dividend on preference shares and the P2 per share dividend on ordinary shares. These dividends are payable in 2022.
Profit for 2021 is P330,000.

Required:

Prepare a statement of changes in equity for the year ended Dec. 31, 2021.

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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