[Date] Business Case 2

Partnership Accounting and

Corporation

Anna Mae Garcia & Maurice Martinez

MK21
ACCT2: ACCOUNTING FOR PARTNERSHIP & CORPORATION
MINI BUSINESS CASE 2

CASE 1:
Choose 2 companies (open or publicly-listed, domestic/foreign corporations) belonging to the same industry.
From their company websites, use the information found in the Statement of Financial Position (Balance Sheet)
and Notes to Financial Statements to answer the following questions:
a) What is the par or stated value of the ordinary shares of those companies?
b) What percentage of authorized shares were issued by those two companies? Choose any year/period by
which those two companies have issued.
c) How many shares are held as treasury shares by those two companies? Choose any year/period by which
those two companies have treasury shares.
d) How many shares are outstanding for those two companies as of December 31, 2016?
e) For item c., what are some of the reasons why the management reacquires its own shares?
f) Explain how earnings per share might be affected by treasury share transactions?

Requirements:
1. Answer the above independent questions (typewritten, short bond paper)
2. List the websites of the two companies used for comparative analysis as reference/bibliography (e.g.
www.___.com). Failure to cite the website of the companies as reference means deduction to the over-
all score

CASE 2:
Benjamin Cruz is a stockholder of Motorcross Corporation which was granted approval to issue 100,000 ordinary
shares at a par value of P1,000 per share. All shares have been issued and paid for. Cruz holds a certificate for
5,000 shares which he brought for P7,500,000. The Corporation made an announcement that it was planning to
expand its operation and that it would need more capital. A month after the announcement, Cruz received notice
of a new sale for 200,000 ordinary shares at P1,250 per share although the market price for this is P2,000 per
share.

Mr. Cruz has asked for your opinion/answers regarding some questions he has in mind:
a. What will happen if Mr Cruz will not buy additional shares from the batch offered?
b. If he buys, how many shares will he need to buy to maintain his percentage of original
interest/ownership?
c. How much will he pay for those additional shares?

Requirements:
3. Write the answers to each of the questions above. If necessary/applicable, support your answers with
computation.
CASE 3:
Select any company (domestic or foreign, close or open corporation). From their company website (or available
published corporate documents such as Articles of Incorporation) and using the Balance Sheet and notes to
financial statements, identify and write the following information as of December 31, 2016 (or any date if the
Company is following fiscal year):
a. Name of the Corporation
b. Total CURRENT ASSETS
c. Total CURRENT LIABILITIES
d. Total SHAREHOLDERS’ EQUITY
e. Total retained earnings
f. Total number of outstanding shares (ordinary)

The Board of Directors is consulting with you (as Finance Manager) the possibility of declaring dividends given the
two sets of alternatives:

a) P25 cash dividend per outstanding share (ordinary shares only)

b) 25% stock dividends on total outstanding shares

Requirements: Analyze the above case by computing how much will be the effect of each alternative to:
a. Total CURRENT LIABILITIES
b. Total SHAREHOLDERS’ EQUITY
c. CURRENT RATIO (Current assets/Current liabilities) before and after the cash and stock dividend
declaration.

From the above computation, which of the 2 alternatives (P25 cash dividend per outstanding share or 25% stock
dividends on total outstanding shares) will give a better financial position to the chosen company? Show
computations to support your answer