EXERCISES

A. For the last three years, Squarepants Corporation paid the following cash dividends:
2016 – P 250,000; 2017 – P 350,000; 2018 – P 650,000
During the last three years, capital accounts show the following number of shares outstanding:
12% Preference Shares, P 100 par 10,000 shares
Ordinary Shares, P 10 par 50,000 shares

Dividends are in arrears for two years at the beginning of 2016.

Required: Compute the amount of dividends that will be paid in total and per share on preference shares and
ordinary shares for each year under the following independent assumptions:
1. Preference shares are non-cumulative and non-participating
2. Preference shares are cumulative and non-participating
3. Preference shares are non-cumulative but participating
4. Preference shares are cumulative and participating
5. Preference shares are non-cumulative and but participating up to 6%.

NOTE: To compute dividends per share = Total dividends/number of shares issued and outstanding

B. The adjusted trial balance of Miami Heat Corporation on December 31, 2018 includes the following account
balances:
Cash Dividends payable P 40,000
Income Tax Payable 25,000
Ordinary Share Capital,P 20 par value, 200,000 shares authorized 2,400,000
Ordinary Shares Subscribed, 80,000
Ordinary Share Premium 240,000
10% Preference Share Capital, 25,000 shares authorized, 12,000 shares outstanding 1,200,000
Preference Share Premium 120,000
Retained Earnings Appropriated for Contingencies 150,000
Retained Earnings Appropriated for Plant Expansion 100,000
Retained Earnings-Unappropriated 400,000
Ordinary Share Dividend Distributable 350,000
Paid in Capital from Share Dividends 130,000
Pre-operating Costs 25,000

Required:
1) OSC issued and outstanding shares
- P2.4M/P20 par value=120,000 shares
2) OSC subscribed shares
- P80k/P20 par value=4,000 shares
3) PSC Par Value per share
- P1,200,000/P12,000 outstanding shares= P100 par value
4) Total share capital
- OSC + PSC + OSC Subscribed + Ordinary Share dividend Distributable= 2.4M +1.2M + 80k+350k =
4,030,000
5) Total APIC
- OS Premium+ PS Premium+ Paid in Capital from Share Dividends = 240k+120k+130k= 490,000
6) Total Paid in Capital/ CONTRIBUTED CAPITAL
- Total Share Cap (4) + Total APIC(5) = 4,030,000+ 490,000 =4,520,000
 7) Legal Capital/ SHARE CAPITAL
- SAME AS NUMBER 4 = 4,030,000
8) Unappropriated Retained Earnings
- GIVEN – 400k
9) Total Retained Earnings
- TOTAL APPROPRIATED RE+ UNAPPROPRIATED =250K + 400K = 650K
10) Assuming the cancellation of the RE Appropriated for Plant Expansion, how much will be the Total RE?
- GANUN PA RIN= 650,000 KASI BABALIK NAMAN YUNG PLANT EXPANSION SA
UNAPPROPRIATED COLUMN

11) Given the above data, how much is the total liabilities?
- CASH DIVIDENDS PAYABLE+ IT PAYABLE=40K+25K= 65K

12) Prepare the Shareholders’ Equity section as it would appear on the Statement of Financial Position

C. Anthor Corporation’s statement of financial position shows total shareholders’ equity of P 3,000,000 as of
December 31, 2018. Compute the book value per share of each class of share capital under each of the
following independent cases: (SUBSCRIBED SHARES AY KASAMA SA COMPUTATION)

- TOTAL SHAREHOLDERS’ EQUITY/ OSC OUTSTANDING (KAPAG ISA LANG CLASS)

1. The corporation has only one share class of shares outstanding: 325,000 Ordinary shares with a par
value of P 25.
- 3,000,000/325,000= P9.23

2. The corporation has two classes of shares outstanding: 15,000 shares of P 100 par value Preference
share capital with a liquidation value of P 120 per share and 125,000 shares of P 20 par ordinary
share capital.
- TOTAL SHAREHOLDERS’ EQUITY- PSC LIQUIDATION VALUE (120X15,000)
- 3M-1.8M(PSC EQUITY IDENTIFIED) = 1.2M(OSC EQUITY IDENTIFIED)
- BV per share
- PSC = 1.8m/15k shares, OSC= 1.2m/125k shares
- PSC= P120, OSC=P9.60

D. The Drea Corporation has 200,000 ordinary shares authorized, P 20 par value. As of December 31, 2018,
60,000 shares are outstanding. Compute the earnings per share assuming the corporation has a profit of:
PROFIT/SHARES OUTSTANDING
a. P 10,000 =0.17 b. P 70,000 =P1.17 c. P 90,000= P1.5 d. P 150,000 =P2.5
e. P 180,000 = P3
E. The shareholders' equity of Lorraine Corporation as of December 31, 2018 showed the following balances:
Ordinary Share Capital, P 15 par, 100,000 shares P 1,500,000
10% Preference Share Capital, P 25 par, 10,000 shares 250,000
Preference Share Premium 150,000
Ordinary Share Premium 200,000
Retained Earnings 200,000
Total Shareholders’ Equity P 2,300,000

Compute the book value per share on the preference and ordinary shares under each of the following
assumptions.
1. Preference shares have a liquidation value of P 30 per share; there are no dividends on arrears.
TSHE 2.3M
LESS 30X10K: 300K
Equity identified w/OCS 2M
BV PS= 300k/10K = P30
OS= 2M/100K = P20

2. The preference shares are cumulative with dividends in arrears for 5 years (including the current
year). Upon corporation liquidation, shares are preferred to assets up to par.
TSHE 2.3M
LESS 30X10K: 300K
DIVIDENDS 10%X250K 125 425K
EQUITY IDENTIFIED OSC 1,875,000
BV PER SHARE
PSC= 425K/10K= P42.5
OSC= 1875000/100K =P18.75
3. Using data in no. 1, compute the earnings per share assuming that the profit of the corporation is
a. P 20,000 b. P 75,000 c. P 120,000 d. P 300,000

F. The Jomel Corporation has the following information relating to its share capital

10% Preference Shares, cumulative, P 100 par value,

300,000 shares authorized, 20,000 shares outstanding P 2,000,000

Ordinary Shares, P 10 par value, 500,000 shares authorized,

300,000 shares outstanding 3,000,000

Compute the earnings per share assuming that the corporation reported a profit of P 750,000 as of December
31, 2018.