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CoursHeroTranscribedText: 120, 5 PROBLEM 32-28 Comprehensive Problem Marianne Corporation had the following shareholders' equity account balances at December 31, 2020: 10% Convertible preference shares (P100 par value; 100,000 shares authorized, 40,000 shares issued and outstanding) P4,000,000 Ordinary shares (P10 par value; 200,000 shares authorized, 84,000 shares issued) 840,000 Subscribed ordinary shares 100,000 Subscriptions receivable 52,000 Share premium 968,000 Retained earnings 15,000,000 Total P20,948,000 Less: Treasury ordinary shares (4,000 shares) 44,000 Total Shareholders' Equity P20,904,000 The subscribed ordinary shares account is composed of 10,000 shares subscribed at P13 per share. The subscription contract required a cash down payment equal to 60% of the subscription price, with the balance due on February 1, 2021. Transactions in 2021: 1) On February 1, 2021, the 8,000 ordinary shares were issued according to subscription contract. Because of default by a subscriber, 2,000 shares were not issued. All payments made by the subscriber were forfeited in favor of the Company. 2) On March 1, 2021, 2,000 preference shares were converted to ordinary shares. One preference share is convertible into two ordinary shares. At the time of conversion, the preference shares had a market value of P125 while the ordinary shares had a market value of P25 per share. 3) On April 1, 2021, 92,000 share rights were issued to the ordinary shareholders permitting the purchase of two new shares of ordinary share in exchange for one right and P15 cash. On April 25, 2021, 67,500 stock rights were exercised when the market price of Marianne's ordinary shareswas P20 per share. Marianne issued new shares to settle the transaction. The remaining 24,500 rights were not exercised and thus expired. share. 4) On September 30, 2021, 3,000 treasury shares were reissued at P20 per 5) On January 15, 2022, before the accounting records were closed for 2021, Marianne became aware that the rent income for the year ended December 31, 2020 was understated by P400,000. The after tax-effect on the 2020 net income was P280,000. The appropriate correcting entry was recorded the same day. 6) After correcting the rent income, net income for 2021 was P2,500,000 7) Cash dividends are declared for preference and ordinary shares on April 30 and October 31. Semi-annual cash dividends for ordinary shares are P1 per share. Questions: Based on the above data, determine the following as of December 31, 2021: 1. Preference shares a. P4,000,000 E. P3,500,000 b. P3,860,000 d. P3,800,000 2. Ordinary shares a. P2,530,000 c. P2,310,000 b. P2,270,000 d. P2,520,000 3. Total share premium a. P1,845,600 c. P1,839,600 b. P1,908,600 d. P1,925,100 4. Retained earnings - unappropriated c. P16,652,000 a. P16,932,000 d. P16,355,000 b. P16,552,000 5. Total shareholders' equity c. P24,601,600 a. P24,881,600 d. P24,300,100 b. P24,501,600

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