FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Shake It Off Co. was formed on July 1, 2018. It was authorized to issue 1,800,000 shares of 10 par value 
ordinary shares and 600,000 shares of 8% P25 par value, cumulative and nonparticipating preference 
shares
. Shake It Off Co. has a July 1- June 30 fiscal year.


The following information relates to the shareholders’ equity accounts of Shake It Off Co.:
Ordinary Shares
Prior to the 2020-2021 fiscal year, Shake It Off Co. had 660,000 ordinary shares issued as follows:
1. 510,000 shares were issued for cash on July 1, 2018, at P31 per share
2. On July 24, 2018, 30,000 shares exchange for a plot of land which cost the seller P420,000 in 2012
and had an estimated market value of P1,320,000 on July 24, 2018.
3. 120,000 shares were issued on March 1, 2019, for P42 per share.


During the 2020-2021 fiscal year, the following transactions regarding ordinary shares took place:
November 30, 2020 - PABEBE CO. purchased 12,000 of its own shares on the open market at P39 per 
share
December 15, 2020-  PABEBE CO. declared a 5% stock dividends for shareholders of record on January 
15, 2021, to be issued on January 31, 2021. Shake It Off Co. was having a liquidity 
problem and could not afford a cash dividend at that time. Shake It Off Co.’s 
ordinary shares were selling at P52 per share on December 15, 2020
June 20, 2021 - PABEBE CO. sold 3,000 of its own ordinary shares that it had purchased on November 30, 2020, for P126,000.

Preference Shares
Shake It Off Co. issued 240,000 preference shares at P44 per share on July 1, 2019. 


Cash Dividends
Shake It Off C. has followed a schedule of declaring cash dividends in December and June, with payment 
being made to the shareholders of record in the following month. The cash dividends which have been 
declared since inception of the company through June 30, 2021, are shown below:
Declaration Date                  Share Capital Ordinary               Share Capital Preference
12/15/19                                0.3 per share                                  1 per share
6/15/20                                  0.3 per share                                  1 per share
12/15/20 -                                                                                      1 per share


No cash dividends were declared during June 2021 due to the company’s liquidity problems.

Retained Earnings
As of June 30, 2020, Shake It Off Co.’s retained earnings account has a balance of P4,140,000. For the fiscal 
year ending June 30, 2021, PABEBE CO. reported net income of P240,000.

 

Compute the adjusted balances of the following as of June 30, 2021.
5.Share Capital-preference
6.Share capital-ordinary
7.Share Premium-preference
8.Share Premium-ordinary
9.Share premium-treasury
10.Retained earnings (before appropriation for TS)
11.Treasury shares
12. Total shareholders’ equity

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