Reference no: EM132949151
Questions -
Q1. The following accounts and their balances are found in the records of Alamo Corporation: authorized share capital of par P100 is P10,000,000 of which P5,000,000 was issued and its accumulated earnings as of January 1 is P1, 275, 000. You were given the following additional information:
Cash Dividends of P10,
June 30. P500,000
Appropriation for Plant
Expansion, December 1 P250,000
Net Loss for the year. P80,000
Direction:
a. Give the entries needed for the above information
b. What is the balance of the free or unrestricted retained earnings as of December 31?
Q2. The records of Alamo Corporation showed the following data:
Ordinary Share Capital, par
P100, authorized 200, 000
shares, issued 50, 000
shares P5,000,000
Share Premium. P230, 000
Retained Earnings. P2, 300, 000
Direction: From the following independent cases, journalize the dividend declaration and the dividend payment:
a. The Board of Directors declared a 10% cash dividend.
b. The Board of Directors declared a P5 cash dividend.
c. The Board of Directors declared a merchandise dividend of P15 per share.
d. The Board declared a property dividend of 2 SMB shares for one Alamo share. SMB shares are selling at P15 but were acquired by Alamo Corporation @P10. Use PAS 39. SMC shares are considered available for sale securities.
e. The Board declared a 22% stock dividend. Stocks are selling at P105 per share.
f. The Board declared a 12% stock dividend. Market value of stock is P120.
Q3. Using the data in No. 2 but with additional information that the available cash of the corporation is only P300, 000. Commitment on the declaration made by the Board in the above first two cases.
Q4. Using case f) in Exercise 2, prepare the shareholders' equity section after the declaration and another shareholders' equity section after the distribution of dividends.
Q5. The following information appears in the books of Great Corporation:
Share Capital , par P100
Subscribed Share Capital
Share Premium
Retained Earnings
Treasury Shares
(1, 000 shares)
The Board declared a cash dividend of P15 per share on November 15, 2014 to shareholders of record as of December 15, 2014, payable on January 10, 2015.
Direction:
a. How many shares are entitled to dividends?
b. Entries for the above transactions.
c. How much is free retained earnings?
Q6. On December 31, 2015, the shareholders' equity section of R U B Corporation reflected the following:
Common stock (par P10;
authorized 60,000 share, outstanding 25, 000 shares) P250,000
Additional paid-in capital P12, 000
Retained earnings. P75, 000
On February 1, 2016, the Board of Directors declared a 10% stock dividends to be issued April 30, 2016. The market value of the stock on February 1 was P18.
Direction:
a. Prepare the required entries for the declaration and distribution.
b. Prepare the shareholders' equity section of immediately after the stock dividend was declared.
c. Compare with the accounts and figures given above and explain the effects of this stock dividend on the a) assets, b) liabilities, c) shareholders' equity.
d. Give again the shareholders' equity immediately after the stock dividend was distributed. Compare the accounts against no. 1 above and explain the effects of this distribution on the a) assets, b) liabilities, c. shareholders' equity.