Reference no: EM132758604
Questions -
Q1. On July 1, 20X5, Suarez Company declared as property dividends inventory with a carrying amount of P4 million. Information on fair values is as follows:
Fair Value*
July 1, 20X5 P4.4 million
July 31, 20X5 P4.8 million
The fair value is not materially different from the net realizable value.
Required -
1. How much is the debit to retained earnings on July 1, 20X5?
2. On July 31, 20X5, the property dividends payable is settled. How much is the gain or loss on settlement recognized in P&L?
Q2. The shareholders' equity of Howell Company at July 31, 2019 is presented below:
Share capital-ordinary, par value 20, authorized 400,000 shares; issued and outstanding 160,000 shares P3,200,000
Share premium-ordinary 160,000
Retained earnings 650,000
P4,010,000
On August 1, 2019, the board of directors of Howell declared a 15% share dividend on ordinary shares, to be distributed on September 15th. The market price of Howell's ordinary shares was 35 on August 1, 2019, and 38 on September 15, 2019.
Required -
1. Prepare all journal entries in 2019.
2. Compute the amount of the debit to retained earnings as a result of the declaration and distribution of this share dividend.
Q3. On April 1, 2018, Fender Guitar Company declared 1,000 share dividends in the form of preference shares to its ordinary shareholders of record as of April 15, 2018 for distribution on May 1, 2018. Fender has 10,000 ordinary shares outstanding. The par value of preference shares is P400. The market price of the preference shares on date of declaration is P600.
Required - How much is the debit to retained earnings on April 1, 2018?
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