Reference no: EM133105022

Question 1 - VY Company has only 15 ordinary shares issued and outstanding. The total contributed capital was P20,000,000 and retained earnings amounts to P14,000,000.

On December 29, 2021 VY Company declared dividends to its ordinary shareholders. The dividends gave its ordinary shareholders the option between receiving a cash dividend of P100,000 per share or a property dividend in the form of a non-cash asset. Each non-cash asset has a fair value of P120,000. It was estimated by VY Company that 80% of the ordinary shareholders will take the option of the cash dividend and 20% will elect for the non-cash asset.

What the reduction to the retained earnings account as a result of the dividend declaration?

Question 2 - WY Company has the following capital stock outstanding:

Common, P5 par, 500,000 shares outstanding P 2,500,000

10% Preferred, P50 par, 10,000 shares outstanding 500,000

In 2021 WY Company declared and paid a cash dividend of P550,000.

Determine the amount distributed among the common and preferred stockholders assuming

a. preferred stock is non-cumulative and non-participating.

b. preferred stock is cumulative and non-participating; no dividends have been declared since 2020.

c. preferred stock is non-cumulative and fully participating.

d. preferred stock is cumulative and fully participating; no dividends have been declared since 2020.