Short Problem #1

High Five Corporation has 750,000 shares authorized of P20 par ordinary shares. At the end of the year, there are 200,000 shares remain
share. The stock's market value is P37 per share. The Board of Directors declared and distributed a 10% ordinary share dividend on Dece

What should be the credit entry to record the shares reacquired?

Date Account Titles and Explanation
Treasury Stock
Cash
To record acquisition of treasury shares.

How many shares are issued as stock dividends?

Issued, beginning 750,000
Issued, ending 200,000
550,000
Less: Treasury Stock 50,000
Total Outstanding Shares 500,000
x 10% stock dividends 10%
50,000

What should be the value debited to Retained Earnings?

Date Account Titles and Explanation
Retained Earnings
Ordinary Shares
Share Premium-Ordinary
To record declaration of 10% share dividends.

Which of the following credit entry showed the full effect of declaring and distributing the divide
Date Account Titles and Explanation
Retained Earnings
Ordinary Shares
Share Premium-Ordinary
To record declaration of 10% share dividends.

Short Problem #2
Effective February 7, 2018 Trump Corporation declared a cash dividend of P15 per share to its outstanding shares. At present it issued 65
was payable to shareholders of record on February 28 and payment was made on March 31.

How many are the outstanding shares?

Issued Shares 65,000
Less: Treasury Shares 8,000
Outstanding Shares 57,000

As a result of this cash dividend, will the liabilities increase (decrease) on February 7 and by how
Date Account Titles and Explanation
DATE OF DECLARATION
Feb-07 Retained Earnings
 Cash Dividends Payable
To record declaration of cash dividend.
ANSWER: Increase of P855,000

What should be the value debited to Retained Earnings?

ANSWER: 855,000 (but answer is not in the choices)

As a result of this cash dividend, will the liabilities increase (decrease) on March 31 and by how
Date Account Titles and Explanation
DATE OF PAYMENT
Mar-31 Cash Dividends Payable
Cash
To record payment of cash dividend.

Short Problem #3
ABS Corporation owned 50,000 ordinary shares of GNA Corporation, purchased in 2017 for P48 per share. On December 5, 2019, ABS C
shares of GNA Corporation for every 5 shares of ABS Corporation shares held by its shareholders. The property dividend was distributed
Corporation held by ABS Corporation was P55 per share.

What was debited as Investment in Equity Securities to GNA Corporation in 2017 and how much
Date Account Titles and Explanation
DATE OF DECLARATION
Dec-05 Retained Earnings
Property Dividends Payable
To record declaration of property dividends.

DATE OF PAYMENT
Jan-10 Property Dividends Payable
Investment in Equity Securities-GNA Corporation
Gain on Distribution of Property Dividends
To record the distribution of property dividends.

How much should be debited to Retained Earnings on the date of the declaration, Dec. 5,2019?
ANSWER: 2,750,000

Upon the distribution of property dividends, what was the credit entry upon the distribution of pr
ANSWER: Investment in Securities Equity - GNA Corporation P 2,400,000
Date Account Titles and Explanation
Yr 2017 Retained Earnings
Property Dividends Payable
To record declaration of property dividends.

If Richard Saavedra has 1,800 Ordinary shares of ABS Corporation, how many property dividend
1,800
x 2
3,600
5
 Richard Saavedra will receive 720

Short Problem #4
On May 1, 2018 beginning of the fiscal year, Children of Pacioli Corporation showed a retained earnings balance of P875,000. During the
of net sales & incurred expenses of P2,100,000, dividends of P600,000 were declared and paid, and the balance of the cash account incr
How much was the profit for the year?
Net Sales 6,500,000
Less: Cost of Sales 2,600,000
Cost of Goods Available for Sale 3,900,000
Less: Expenses 2,100,000
Net Profit 1,800,000

How much is the shareholders' equity at the end of the year?

Retained Earnings 875,000
Add: Profit 1,800,000
2,675,000
Less: Dividends 600,000
Total Shareholders' Equity 2,075,000

Short Problem #5
On Jan. 1, 2017, Bench & Friends Corporation, a newly organized business at which date it issued 100,000 shares at P10 par ordinary sh
reported profit of P450,000 and paid cash dividends of P230,000. On Jan. 10, 2018, it purchased 6,000 shares of its ordinary shares at P
and retired the remaining treasury shares. It uses the cost method of accounting for treasury shares.
How much is the total paid in capital as at December 31, 2018?
Ordinary Shares 100,000 x P10
Share Premium 100,000 x P5
Total Paid-In Capital
How much is debited to Treasury shares on Jan. 10, 2018?
Date Account Titles and Explanation
Jan-10 Treasury Shares
Cash
To record acquisition of treasury shares.

What account was used to charge the difference between the purchase price (cost) of the Treasu
Date Account Titles and Explanation
Cash
Retained Earnings
Treasury Shares
To record reissue of treasury shares below cost.

Ordinary Shares
Share Premium
Treasury Shares
To record retirement of treasury shares.
What was the total deductions to Retained Earnings at the end of year 2018?
Total Paid-In Capital
Net Profit

Less: Cash Dividends 230,000

Treasury Shares 24,000
Treasury Shares sold Below Cost 16,000

What was the total shareholders' equity of Bench & Friends Corporation as at Dec. 31, 2018?
ANSWER: 1,680,000
 there are 200,000 shares remaining in the authorized and in August, there were 50,000 shares reacquired at P28 per
ordinary share dividend on December 31, 2018.

Debit Credit Computation:

₱ 1,400,000.00 50,000 shares x P28 (at cost) = 1.4M
₱ 1,400,000.00

shares

Debit Credit Computation:

1,850,000 50,000 shares x P37 FMV = 1,850,000
1,000,000 50,000 shares x P20 PV = 1,000,000
850,000 1,850,000-1,000,000 = 850,000

distributing the dividend?

Debit Credit
1,850,000
1,000,000
850,000

ng shares. At present it issued 65,000 shares including 8,000 that were reacquired on January 31, 2018. This dividend

shares

n February 7 and by how much?

Debit Credit
Computation:
855,000 57,000 outstanding shares x P15 = 855,000
 855,000

n March 31 and by how much?

Debit Credit

855,000
855,000

re. On December 5, 2019, ABS Corp. declared a property dividend of all its GNA Corporation shares on the basis of 2
property dividend was distributed on January 10, 2020. On the date of declaration, the market price of GNA

in 2017 and how much?

Debit Credit

2,750,000
2,750,000

2,750,000
2,400,000
350,000

laration, Dec. 5,2019?

on the distribution of property dividends?

Debit Credit
2,750,000
2,750,000

many property dividends was received?

 shares

balance of P875,000. During the fiscal year, the Corporation had a net sales of P6,500,000, the cost of sales was 40%
balance of the cash account increased by P280,000.

00 shares at P10 par ordinary shares at P15 per share. During the period Jan. 1 to Dec. 31, 2018, Bench & Friends
hares of its ordinary shares at P12 per share. On December 28, 2018, it sold 4,000 treasury shares at P8 per share

1,000,000
500,000
1,500,000

Debit Credit Computation:

72,000 6,000 shares x P12 (at cost) = 72,000
72,000

rice (cost) of the Treasury and its selling price and how much?
Debit Credit Computation:
32,000 4,000 x P8 (below cost) = 32,000
16,000 48,000-32,000 = 16,000
48,000 4,000 x P12 = 48,000

24,000
 1,500,000
450,000
1,950,000

270,000 Total deductions to Retained Earnings

1,680,000

as at Dec. 31, 2018?