ORANGE Corporation is authorized to issue 250,000 ordinary shares at P 12.00 par value. During 2022, in its first year of operation, the following transactions occurred: • Issued 15,000 ordinary shares at P 18.00 on May 1. • Issued 25,000 ordinary shares at P 25.00 on August 1.• Reacquired 2,000 ordinary shares at P 12 per share on October 1.• Reissued 1,000 ordinary treasury shares at P 20 per share on December 1. How much is the balance of the Ordinary Shares as of Dec 31, 2022Group of answer choicesP423,000P891,000P415,000P480,000 PreviousNext
Question
ORANGE Corporation is authorized to issue 250,000 ordinary shares at P 12.00 par value. During 2022, in its first year of operation, the following transactions occurred: • Issued 15,000 ordinary shares at P 18.00 on May 1. • Issued 25,000 ordinary shares at P 25.00 on August 1.• Reacquired 2,000 ordinary shares at P 12 per share on October 1.• Reissued 1,000 ordinary treasury shares at P 20 per share on December 1. How much is the balance of the Ordinary Shares as of Dec 31, 2022Group of answer choicesP423,000P891,000P415,000P480,000 PreviousNext
Solution
To calculate the balance of the Ordinary Shares as of Dec 31, 2022, we need to consider the transactions that occurred during the year.
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On May 1, 15,000 ordinary shares were issued at P 18.00. However, since shares are recorded at par value, we multiply the number of shares by the par value: 15,000 shares * P 12.00 = P 180,000.
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On August 1, 25,000 ordinary shares were issued at P 25.00. Again, we record at par value: 25,000 shares * P 12.00 = P 300,000.
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On October 1, 2,000 ordinary shares were reacquired at P 12 per share. This does not affect the balance of the Ordinary Shares account as reacquired shares are treasury shares and do not change the issued shares.
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On December 1, 1,000 ordinary treasury shares were reissued at P 20 per share. This also does not affect the balance of the Ordinary Shares account as these are already issued shares.
Adding the amounts from the first two transactions gives us the balance of the Ordinary Shares as of Dec 31, 2022: P 180,000 + P 300,000 = P 480,000.
So, the correct answer is P480,000.
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