ANGELES UNIVERSITY FOUNDATION

Angeles City
COLLEGE OF BUSINESS AND ACCOUNTANCY

ESPACOAC QUIZ#5F Rio L. Sunga

MULTIPLE CHOICE: (30 POINTS)- 75 MINUTES

1. The balance of retained earnings of Khaya Khoto Company at the beginning of the year was
P650,000. During the year, Khaya Khoto earned revenues of P4,500,000 and incurred expenses
of P3,800,000, dividends of P500,000 were declared and paid, and the balance of the cash
increased by P220,000. The company’s profit and the year-end balance in the retained earnings
account, respectively, are
Profit Retained Earnings
a. P700,00 P850,000
b. P200,000 P850,000
c. P700,000 P1,070,000
d. P200,000 P1,070,000

2. Tsaga Corp.’s outstanding shares at December 31, 20X1, consisted of the following:
 30,000 shares of 5% Cumulative Preference Shares, P10 par value, fully participating as
to dividends. No dividends were in arrears.
 200,000 Ordinary Shares, P1 par value

On December 15, 20X1, Tsaga declared dividends of P100,000, What was the amount of
dividends payable to Tsaga’s ordinary shareholders?
a. P10,000 b. P34,000 c. P40,000 d. P47,500

3. Wagbhitiw Trade, Inc. has 10,000 shares of 7% P50 par preference shares, and 100,000 shares of
P4 par ordinary shares outstanding. Two years’ preference dividends are in arrears. Wagbhitiw
Trade declared a cash dividend large enough to pay the preference in arrears, the preference
dividends for the current period, and a P1.50 dividend to ordinary. What is the total amount of
the dividend?
a. P105,000 b. P150,000 c. P220,000 d. P255,000

4. The following data are extracted from the shareholders’ equity section of the statement of
financial position of Thiislang Corporation:

‘12/31/20X0 ‘12/31/20X1
Ordinary Shares, P2 par value P1,000,000 P1,020,000
Share Premium 500,000 580,000
Retained Earnings 1,000,000 1,046,000

During 20X1, the corporation declared and paid cash dividends of P150,000 and also declared and issued
a share dividend. There were no other changes in shares issued and outstanding during 20X1. Profit for
20X1 was
a.P 46,000 b. P 196,000 c. P 216,000 d. P296,000

5. The following information was abstracted from the accounts of the Khitams Corp. at year end:

Total profit since incorporation P420,000

Total cash dividends paid 130,000
Proceeds from sale of donated shares 45,000
Total value of stock dividends distributed 30,000
Excess proceeds over cost of treasury shares sold 70,000

What should be the balance of Retained Earnings?

a.P 260,000 b. P290.000 c. P305,000 d. P335,000

6. Yacapinmo Company, a real estate developer, is owned by five founding shareholders.

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 On December 1, 20X0, the entity declared a property dividend of a “one-bedroom flat” for each
shareholder. The property dividend is payable on January 31, 20X1.

On December 1, 20X0, the carrying amount of a one-bedroom flat is P1,000,000 and fair value is
P1,500,000.

However, the fair value is P1,800,000 on December 31, 20X0 and P1,900,000 on January 31,
20X1.

What is the dividend payable on December 31, 20X0?

a. P5,000,000 b. 7,500,000 c. 9,000,000 d. -0-

7. At the beginning of the current year, Thitigan Company declared a 10% stock dividend. The
market of the entity’s 30,000 outstanding shares of P20 par value was P90 per share on that
date.

The stock dividend was distributed on July 1, when the market price was P100 per share.

What amount should be credited to share premium for the stock dividend?
a. P210,000 b. P240,000 c. P270,000 d. P300,000

8. Hapdi Corp. was organized on January 1, 20X0.at which date it issued 100,000 shares of P10 par
ordinary share capital at P15 per share. For the period 2008 to 20X2, the company reported
profit of P450,000 and paid cash dividends of P230,000. On January 10, 20X2, the company
purchased 6,000 of its own shares at P12 per share. On November 20, 20X2, Hapdi sold 4,000
treasury shares at P8 per share. What is the total shareholders’ equity on December 31, 20X2?
a. P1,680,000 b. P1,688,000 c. P1,704,000 d. P1,720,000

9. Satagumpay Inc. has outstanding 200,000 shares at P2 par ordinary shares and 40,000 shares 8%
preference share with a par value of P5. The preference share is cumulative and non-
participating. Dividends have been paid in every year except the past two years and the current
year.

Assuming that P42,000 will be distributed as dividends in the current year, how much will the
preferred shareholders receive?
a. P48,000 b. P16,000 c. P32,000 d. P42,000

10. Using the information in No. 9, assuming that P122,000 will be distributed, and the preferred
stock is also participating, how much will the ordinary shareholders receive?
a. P74,000 b. P60,000 c. P62,000 d. P32,000

11. Lhang Hito Inc. declared a 5% dividend on its 10,000 issued and outstanding shares of P2 par
value ordinary shares, which had a fair market value of P5 per share before the share dividend
was declared. This share dividend was distributed 60 days after the declaration date. By what
amount did Lhang Hito’s current liabilities increase as a result of the share dividend declaration?
a. P -0- b. P500 c. P1,000 d. P2,500

12. Odibha Company has paid all required preference dividends through December 31, 20X0. Its
outstanding shares consists of 10,000 shares of P125 par value ordinary shares and 4,000 shares
of 6% P125 par value preference shares. During four successive years, the company’s dividend
declarations were as follows:

YEAR AMOUNT YEAR AMOUNT YEAR AMOUNT YEAR AMOUNT

20X1 85,000 20X2 7,500 20X3 15,000 20X4 69,500

Compute the amount of dividends that would have been paid to each class of shares in each of the last
four years assuming the preference shares is cumulative.

YEAR PREFERENCE SHARE ORDINARY SHARE

20X1 30,000 55,000
20X2 7,500 -0-
20X3 15,000 -0-
20X4 67,500 2,000

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