Professional Documents
Culture Documents
Duyao - Yvonne Antonette - M4Assgnment
Duyao - Yvonne Antonette - M4Assgnment
Duyao Section 9
CFAS March 15, 2022
REQUIRED:
Compute the book value per share as of December 31, 2014 of Dancing Queen Co.?
Answer:
950,000+500,000+250,0000
Book value per share =
100,000
BVPS = 17
Prepare the entries on March 1, 2014 and April 1, 2014 assuming the company declared (a) 20% issue
and (b) 10% issue.
f. The company holds 15,000 shares in treasury costing P7.00 each with market value of P12 per share.
The BOD declared such treasury shares as dividend on February 14, 2014 to be issued on May 1,
2014.
REQUIRED:
Determine the allocation of the dividend to (1) preference and (2) ordinary, assuming the following cases
independently:
PROBLEM 21. Allocation of Dividends - more than one class of preference shares
The shareholder’s equity in the statement of financial position on December 31, 2014 of Quijones Corporation
showed the following:
Class “A” Preference share capital, 10% P50 par, 40,000 shares P2,000,000
Class “B” Preference share capital, 14% P50 par, 20,000 shares P1,000,000
Ordinary shares capital, P100 par, 30,000 shares 3,000,000
Share premium 500,000
Retained earnings 2,500,000
Total shareholder’s equity P9,000,000
No dividends are in arrears up to December 31, 2012. The company declared P1,100,000 dividend at the end
of 2014 at the appropriate rate for preference shares and the remainder to ordinary. Determine the allocation of
the dividend to
(1) preference and (2) ordinary assuming both class of preference shares are cumulative and participating.
Answer:
Ordinary Share Capital, P 50 par, 100,000 issued and 95,000 outstanding shares 5,000,000
Ordinary Share Premium 1,000,000
Retained Earnings 8,000,000
Treasury Shares 120,000
April 1 Declared a cash dividend of P 10 per share of ordinary shares. The corporation issued 6%
interest bearing promissory note in relation to cash dividend declared payable on September
30 to shareholders of record of April 20.
November 10 Declared a cash dividend of P 6 per share of ordinary shares, payable on December 15 to
shareholders of record of November 20.
Cash Dividend
November 10 Retained Earnings Account (5000*6) 30,000
To dividend Payable 30,000
Declared cash dividend to payable on 15 Dec to
shareholder of record of Nov 20
On December 15, 2020, Goodie Corporation declared a property dividend to shareholders of record of
December 30, distributable on January 5, 2021. The corporation will distribute three (3) ordinary shares of JFC
Corporation for every share of Goodie Corporation owned by the shareholders. Goodie Corporation has 5,000
issued and outstanding shares at the time of declaration. The carrying value of JFC as of December 15, 2020 is
60 per share.
Requirement:
1. Journalize the transactions occurred in relation to property dividends.
The journal entry on the date of declaration to account for the 975,000 increase in the securities' value
would be as follows:
Debit Credit
Marketable Securities 150,000
Gain on Market Securities 150,000
Since retained earnings are used to fund the dividend, a second journal entry is needed on the date of
declaration
Debit Credit
Retained Earnings 975,000
Property Dividends Payable 975,000
On 15th December the following journal entry is made to reflect the distribution of the property dividend to
shareholders:
Debit Credit
Dividend Payable 975,000
Market Securities 975,000
Requirement:
Prepare all the necessary entries to record the transaction of share capital dividends using the following
independent assumptions:
The Company has the same capital structure (except for retained earnings) for the past five year, see details
below:
6% Preference Share Capital, 80,000 shares issued and outstanding, P 50 par P4,000,000
Ordinary Share Capital, 200,000 shares issued and outstanding, P 30 par 6,000,000
Retained Earnings 5,000,000
No dividends were paid prior to 2020 for two years. On December 10, 2020, the Company declared P
1,500,000 as cash dividends to shareholders of record of December 21, 2020, payable on January 5, 2021.
Requirements:
1. Prepare all the necessary journal entries to record the dividend transactions.
2. Allocate the dividends between ordinary shareholders and preference shareholders if:
Case A. Preference share capital is NON-CUMULATIVE and NON PARTICIPATING
Answer:
CASE A.
DATE ACCOUNTS DEBIT CREDIT
Dec 21 2020 Retained Earnings 240,000
To dividend to PS Holders 240,000
Dividend payable to PSH recorded
CASE B.
DATE ACCOUNTS DEBIT CREDIT
Dec 21 2020 Retained Earnings 720,000
To dividend to PS Holders 720,000
Cumulative Dividend payable to PSH
recorded
CASE C.
DATE ACCOUNTS DEBIT CREDIT
Dec 21 2020 Retained Earnings 870,000
To dividend to PS Holders 870,000
Dividend payable to PSH at 6% and
participating dividend
CASE D.
DATE ACCOUNTS DEBIT CREDIT
Dec 21 2020 Retained Earnings 440,000
To dividend to PS Holders 440,000
Cumulative Dividend payable to PSH
recorded
3. Assuming the dividend declared is P 1,000,000 what will be the allocation of dividends if in case the
preference share is CUMULATIVE and FULLY PARTICIPATING
Answer: