Cyclops Company declared a cash dividend of P200 per share to shareholders. It had 1,680,000 shares outstanding. So the cash dividends payable is P200 x 1,680,000 = P336,000,000.
Captain Marvel Company declared total cash dividends of P7,200,000 to its preference and ordinary shareholders. The amounts paid to ordinary shareholders depends on whether the preference shares are cumulative, non-cumulative, and whether they are participating or not.
Bit by Bit Company had multiple classes of preference shares when it declared a total cash dividend of P6,000,000. The amount payable to ordinary shareholders depends on the dividend rights of the preference shares.
Cyclops Company declared a cash dividend of P200 per share to shareholders. It had 1,680,000 shares outstanding. So the cash dividends payable is P200 x 1,680,000 = P336,000,000.
Captain Marvel Company declared total cash dividends of P7,200,000 to its preference and ordinary shareholders. The amounts paid to ordinary shareholders depends on whether the preference shares are cumulative, non-cumulative, and whether they are participating or not.
Bit by Bit Company had multiple classes of preference shares when it declared a total cash dividend of P6,000,000. The amount payable to ordinary shareholders depends on the dividend rights of the preference shares.
Cyclops Company declared a cash dividend of P200 per share to shareholders. It had 1,680,000 shares outstanding. So the cash dividends payable is P200 x 1,680,000 = P336,000,000.
Captain Marvel Company declared total cash dividends of P7,200,000 to its preference and ordinary shareholders. The amounts paid to ordinary shareholders depends on whether the preference shares are cumulative, non-cumulative, and whether they are participating or not.
Bit by Bit Company had multiple classes of preference shares when it declared a total cash dividend of P6,000,000. The amount payable to ordinary shareholders depends on the dividend rights of the preference shares.
Cyclops Company declared a cash dividend of P200 per share to shareholders. It had 1,680,000 shares outstanding. So the cash dividends payable is P200 x 1,680,000 = P336,000,000.
Captain Marvel Company declared total cash dividends of P7,200,000 to its preference and ordinary shareholders. The amounts paid to ordinary shareholders depends on whether the preference shares are cumulative, non-cumulative, and whether they are participating or not.
Bit by Bit Company had multiple classes of preference shares when it declared a total cash dividend of P6,000,000. The amount payable to ordinary shareholders depends on the dividend rights of the preference shares.
Cash Dividend 1) On April 1, 2021, the board of directors of Cyclops Company declared P200 dividends per share to shareholders of record as of April 15, 2021 for distribution on May 1, 2021.
The shareholders’ equity of Cyclops as of April 1, 2021 is as follows
Share capital, authorized capital 12,000 shares, P400 par 3,200,000
Subscribed share capital 880,000 Share premium capital 400,000 Retained earnings 1,816,000 Treasury shares (at cost of P480 per share) 576,000 Other components of equity 280,000 Total shareholders’ equity 6,000,000 How much is the cash dividends payable? A. 1,800,000 B. 1,360,000 C. 2,200,000 D. 1,760,000
Distribution of Cash Dividend
Numbers 2, 3, 4, 5 and 6 Captain Marvel Company declared P7,200,000 cash dividends to its preference and ordinary shareholders out of its profit in 2023. No dividends have been, declared since 2021. The shareholders’ equity immediately before dividend declaration are:
10% Preference share capital, P800 par P 8,000,000
Ordinary share capital, P400 par 32,000,000 Retained earnings 20,000,000 Total shareholders’ equity 60,000,000 2) How much is the dividend to ordinary shareholders if the preference shares are noncumulative? A. 7,200,000 B. 5,080,000 C. 6,400,000 D. 6,000,000 3) How much is the dividend to ordinary shareholders if the preference shares are cumulative? A. 2,400,000 B. 4,800,000 C. 5,600,000 D. 6,400,000 4) How much is the dividend to ordinary shareholders if the preference shares are noncumulative and fully participating? A. 7,560,000 B. 6,400,000 C. 5,120,000 D. 5,760,000 5) How much is the dividend to ordinary shareholders if the preference shares are cumulative and fully participating? A. 4,480,000 B. 5,125,000 C. 5,760,000 D. 6,400,000 6) The dividend to ordinary shareholders if the preference shares are cumulative and participating up to 16% is A. 5,120,000 B. 4,480,000 C. 5,480,000 D. 4,320,000
FAR by: John Bo S. Cayetano, CPA, MBA Page 1 of 5
Distribution of Cash Dividend – Multiple Preference Share 7) Bit by Bit Company had the following classes of shares outstanding at December 31, 2020:
Dividends on preference shares have been in arrears for 2018 and 2019. On December 31, 2020, total cash dividends of P6,000,000 was declared.
What is the amount of dividends payable to ordinary shares?
A. 2,640,000 B. 2,906,667 C. 2,960,000 D. 3,960,000
Distribution of Cash Dividend – Work-back
8) The board of directors of Aurora Company wishes to declare a dividend whereby ordinary shareholders are to receive a total per share dividend of P4. The equity on December 31, 2017 appears as follows:
The total dividend that must be declared to meet the per share goal of the board of directors is A. 2,012,500 B. 1,575,000 C. 1,400,000 D. 1,175,000
Dividend In-Arrears 9) At December 31, 2019, So Sick Company had 30,000 shares of P100 par, 5% cumulative preference share outstanding. No dividends were in arrears as of December 31, 2017.
So Sick did not declare a dividend during 2018. During 2019, So Sick paid a cash dividend of P100,000 on its preference share.
So Sick should report dividends in arrears in its 2019 financial statements as a/an. A. Accrued liability of P150,000 B. Disclosure of P150,000 C. Accrued liability of P200,000 D. Disclosure of P200,000
Share Dividend – Unissued
10) Aha Company declared and distributed 10% share dividend with fair value of P1,500,000 and par value of P1,000,000, and 25% share dividend with fair value of P4,000,000 and par value of P3,500,000.
What aggregate amount should be debited to retained earnings for the share dividends? A. 4,500,000 B. 3,500,000 C. 5,000,000 D. 5,500,000
FAR by: John Bo S. Cayetano, CPA, MBA Page 2 of 5
Share Dividend – Treasury, FV at declaration VS. FV at distribution Numbers 11 and 12 Over Company showed the following balances: Share capital authorized P100 par, 50,000 shares 5,000,000 Share capital unissued, 20,000 shares 2,000,000 Subscribed share capital, 10,000 shares 1,000,000 Treasury shares (5,000 at cost) 600,000 Share premium 500,000 Retained earnings 1,500,000 Market value of shares: On declaration 140 On issuance date 150 11) What amount is deducted/debited to retained earnings account assuming the Board of Directors declared a share dividend from unissued share capital of one share for each ten shares outstanding? A. 350,000 B. 525,000 C. 560,000 D. 490,000 12) What amount is deducted/debited to retained earnings account assuming the Board of Directors declared a share dividend from treasury shares for each ten shares outstanding? A. 420,000 B. 480,000 C. 300,000 D. 360,000
Property Dividend Numbers 13, 14, 15 and 16 On October 31, Persecution Inc. declared a building as property dividend distributable to shareholders on January 31 of the following year. The building had a carrying amount of P1,500,000 on October 31. The building had a fair value of P1,400,000 on the same date. On December 31 the value of the building deteriorated and latest estimates placed the fair value of the building at P1,200,000.
The building was transferred to shareholders on January 31 when the prevailing fair value of the building was at P1,300,000.
13) The entry to record the declaration of the property dividends would include a debit to retained earnings of A. 1,500,000 B. 1,400,000 C. 1,200,000 D. 0 14) The property dividends payable should be reported in the statement of financial position as of December 31 is A. 1,500,000 B. 1,400,000 C. 1,200,000 D. 0 15) How much loss should be recognized in the income statement on the reclassification of the building to asset held for disposal on the declaration date? A. 300,000 B. 200,000 C. 100,000 D. 0 16) What is the gain or loss to be recognized in the profit or losses as a result of the distribution of the property dividends on January 31? A. 300,000 B. 200,000 C. 100,000 D. 0
FAR by: John Bo S. Cayetano, CPA, MBA Page 3 of 5
Liquidating Dividends 17) On January 1, 2021, the board of directs of Blacked Company declared a cash dividend of P800,000 to shareholders of record on January 15, 2021, and payable on February 15, 2021.
Blacked Company reported the following data on December 31, 2020:
Accumulated depletion 500,000
Share capital 9,000,000 Share premium 300,000 Retained earnings – December 31, 2020 600,000 Net income for 2021 150,000
What amount should be reported as liquidating dividend?
A. 600,000 B. 300,000 C. 200,000 D. 50,000
Script Dividends 18) Shop Company had sufficient retained earnings in 2021 as a basis for dividends but was temporarily short of cash. The company declared a dividend of P100,000 on April 1, 2021 and issued promissory notes to its shareholders in lieu of cash.
The notes, which were dated April 1, 2021, had a maturity date of March 31, 2022 and a 10% interest rate. How should the scrip dividend and related interest be accounted for? A. Debit retained earnings for P110,000 on April 1, 2021. B. Debit retained earnings for P110,000 on March 31, 2022. C. Debit retained earnings for P100,000 on April 1, 2021 & debit interest expense for P10,000 on March 31, 2022. D. Debit retained earnings for P100,000 on April 1, 2021 & debit interest expense for P7,500 on December 31, 2022.
Appropriation of Retained Earnings – Treasury Shares
19) At December 31, 2021, Azores Corp. had 20,000 shares of P1 par value treasury shares that had been acquired in 2021 at P12 per share. In May 2022, Azores issued 15,000 of these treasury shares at P10 per share.
At December 31, 2022, what amount should Azores show in notes to financial statements as a restriction of retained earnings as a result of its treasury shares transactions? A. 5,000 B. 60,000 C. 90,000 D. 240,000
Appropriation of Retained Earnings – Comprehensive
20) The following information pertains to Ox Company:
• Dividends on its 50,000 shares of 10%, P100 par value cumulative preference share capital have not been declared or paid for 3 years. • Treasury ordinary shares were acquired at a cost of P1,000,000 during the year. The treasury shares had not been reissued as of year end. • At the year, Ox appropriated P3,000,000 of retained earnings for the construction of a new plant. • Also, P2,000,000 of cash was restricted for the retirement of bonds payable due in the next year.
What amount of retained earnings should be appropriated as a result of these items?
A. 4,000,000 B. 5,500,000 C. 6,000,000 D. 7,500,000
FAR by: John Bo S. Cayetano, CPA, MBA Page 4 of 5
Quasi Reorganization 21) Adverse financial and operating circumstances warrant that Salt Bae Company should undergo a quasi- reorganization on December 31, 2022. The following information may be relevant:
• Inventory with a fair value of P2,000,000 is currently recorded in the account at a cost of P2,500,000. • Plant asset with a fair value of P7,000,000 are currently recorded at P8,500,000, net. • Individual shareholders contribute P4,000,000 to create additional capital to facilitate the reorganization. No new shares are issued. • The par value of the share is reduced from P25 to P5. • Immediately before these events, the shareholders’ equity appear as follows:
Share premium 1,750,000 Retained earnings (deficit) (3,000,000) After the quasi-reorganization, what amount should be reported as share premium? A. 2,750,000 B. 3,250,000 C. 3,750,000 D. 1,750,000
Quasi Reorganization – Work-back
22) Qick Company has incurred heavy losses since the inception of operations. The board of directors voted to implement a quasi-reorganization, subject to approval of shareholders’. Immediately prior to the restatement, the shareholders’ equity was as follows:
Share capital, P10 par, 500,000 shares 50,000,000
Share premium 5,000,000 Retained earnings (deficit) (8,000,000) The shareholders approved the quasi-reorganization to be accompanied by:
Reduction of inventory 2,000,000
Reduction of property, plant and equipment 4,000,000 Writeoff of goodwill 1,000,000
Appropriate adjustment is made to the capital structure against share premium first and any remaining deficit against the share capital account. To implement the quasi-reorganization, the share capital account should be reduced by what amount? A. 10,000,000 B. 15,000,000 C. 20,000,000 D. 3,000,000
Instant Access to (Ebook) Influential Internal Communication: Streamline Your Corporate Communication to Drive Efficiency and Engagement by Field, Jenni ISBN 9781789666137, 9781789666151, 1789666139, 1789666155 ebook Full Chapters
Instant Access to (Ebook) Influential Internal Communication: Streamline Your Corporate Communication to Drive Efficiency and Engagement by Field, Jenni ISBN 9781789666137, 9781789666151, 1789666139, 1789666155 ebook Full Chapters
