Problem
Bunso Inc., a new corporation organized because of the recent consolidation of Tatay Co. and Nanay Co. shall issue 10% participating preference shares with a par value of P100 for Tatay Co. and Nanay Co. net assets, and ordinary shares with par value of P50 for the difference between the total shares to be issued and preferred shares to be issued. The total shares to be issued by Bunso Inc. shall be equivalent to average annual earnings capitalized at 10%. The books of Tatay Co. and Nanay Co. showed the following:
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Tatay Co.
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Nanay Co.
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Total Assets
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700,000
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900,000
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Total Liabilities
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400,000
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350,000
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Average Annual earnings
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50,000
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70,000
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What is the total no. of ordinary shares to be issued by the Nana Co.? 3,000 show solution.