Althessa Claire Siacor April 12, 2023

BSBA 1-A ACCTG 111B-71849_10:30-11:30 MWF

8-5
The following corporate data were taken from the records of Negros Grains, Incorporated.
7% Preference Share, P50 par – 2,000 shares were issued.
Ordinary Share, P100 par – 3,000 shares were issued.
Accumulated Profits(Losses), P110,000
P80,000 is declared as cash dividends. No dividends were declared in the past two (2)
years.
Required:
1. Perform journal entries to record the declaration and payment of cash dividends when
there are two classes of shares being issued.
UPON Accumulated Profits(Losses) disclosed
DECLARATION Cash Dividends Payable – P dc
Cash Dividends Payable – O dc
#
UPON Cash Dividends Payable – P dc
DISTRIBUTION Cash Dividends Payable – O dc
Cash dc
#
2. Prepare a Schedule of Cash Dividends Distribution showing the dividends per share
assuming that preference shares are:
a) Non-cumulative and Non-participating
Total Preference Ordinary
400,000 100,000 300,000
Outstanding Share Capital x x x
Preference Share Dividends:
Current Year – P100,000 x 7% 7,000 7,000
Ordinary Share Dividends:
Balance to all Ordinary P80,000 – 7,000 73,000 73,000
As Distributed 80,000 7,000 73,000
Dividends per Share 3.50 24.33

Dividends per Share:

Preference: P7,000/2,000 shares issued = P3.50
Ordinary: P73,000/3,000 shares issued = P24.33
b) Cumulative and Non-participating
Total Preference Ordinary
400,000 100,000 300,000
Outstanding Share Capital x x x
Preference Dividends:
Arrears – P100,000 x 7% x 2 years 14,000 14,000
Current – P100,000 x 7% 7,000 7,000
Ordinary Share Dividends:
Balance to all Ordinary
(P80,000 – 14,000 – 7,000) 59,000 59,000
As Distributed 80,000 21,000 59,000
Dividends per Share 10.50 19.67

Dividends per Share:

Preference: P21,000/2,000 shares issued = P10.50
Ordinary: P59,000/3,000 shares issued = P19.67

c) Non-cumulative and Fully participating

Total Preference Ordinary
400,000 100,000 300,000
Outstanding Share Capital x x x
Preference Dividends:
Current Year – P100,000 x 7% 7,000 7,000
Ordinary Dividends at Preference rate:
Current Year – P300,000 x 7% 21,000 21,000
Balance for Participation 52,000
Preference: ¼ x P52,000 13,000
Ordinary: ¾ x P52,000 39,000
As Distributed 80,000 20,000 60,000
Dividends Share 10.00 20.00

Dividends per Share:

Preference: P20,000/2,000 shares issued = P10.00
Ordinary: P60,000/3,000 shares issued = P20.00
d) Cumulative and Fully participating
Total Preference Ordinary
400,000 100,000 300,000
Outstanding Share Capital x x x
Preference Dividends:
Arrears – P100,000 x 7% x 2 years 14,000 14,000
Current – P100,000 x 7% 7,000 7,000
Ordinary Dividends at Preference rate:
Current Year – P300,000 x 7% 21,000 21,000
Balance for Participation
(P80,000 – 14,000 – 7,000 -21,000) 38,000
Preference: ¼ x P38,000 9,500
Ordinary: ¾ x P38,000 28,500
As Distributed 80,000 30,500 49,500
Dividends per Share 15.25 16.50

Dividends per Share:

Preference: P30,500/2,000 shares issued = P15.25
Ordinary: P49,500/3,000 shares issued = P16.50