1. An abstract of the shareholders’ equity of the DEF Co.

on December 31,200A appears as follows:

Preference Share, Php35 par value, 150,000 shares issued and
outstanding Php5,250,000
Ordinary Shares, Php25 par value, 300,000 shares issued and
Outstanding 7,500,000
Premium on Preference Share 300,000
Premium on Ordinary Share 300,000
Retained Earnings 1,200,000
Treasury Share – Ordinary 60,000

The Board of Directors decided to establish a reserve of Php250,000 for contingencies and
Php350,000 for plant expansion.

Required:
1. Record the appropriation of Retained Earnings.
2. Prepare the shareholders’ equity section of DEF Corporation
2. The share equity of GHI Corporation on January 1 of the current year 200C is given below:

Share Capital
8% Preference Share, Php100 par value, 3,000 share authorized;
2,000 shares issued of which 250 shares are in treasury Php200,000
Ordinary Shares, Php50 par value, 5,000 shares authorized
3,500 shares issued 175,000
Additional Paid-in Capital:
Premium on Preference Share Php10,000
Premium on Ordinary Share 35,000 45,000
Retained Earnings:
Unappropriated Php75,000
Appropriated for Contingencies 20,000
Appropriated for Treasury Shares 27,500 122,500
Appraisal Capital 15,000
Total Php557,500
Less: Treasury Shares 250 shares at cost 27,500
Total Shareholders’ Equity Php530, 000

The following are the transactions that occurred during the year:

March 1 – The board of directors declared a semi-annual dividend on preference shares and
ordinary shares to shareholders of record as of June 30, to be paid on July 31. The
preference share is cumulative and no dividend have been declared since 200A.
 June 30 – An 8% share dividend on ordinary was declared to shareholders of record as of
August 31, payable on October 15; market value of ordinary is Php58 per share.

July 31 – Paid the preference and ordinary dividends.

Oct. 15 – Distributed the share dividends to ordinary shareholders.

Required: Prepare all the entries for the above transactions.

3. The JKL Corporation has issued both preference and ordinary shares. On January 1, 200D, the
shareholders’ equity of the corporation is as follows:

6% Preference Shares, Php80 par value, authorized and Issued 40,000 shares Php3,200,000
Ordinary Shares, Php100 par value, authorized and issued 50,000 shares 5,000,000
Retained Earnings 2,500,000
Assume that dividends have not been declared since 200B.
Required:
1. Compute the amount to be distributed to preference and ordinary shareholders on each of
the following cases of preference share: a. Non-cumulative, non-participating
b. Cumulative, non-participating
c. Non-cumulative, fully participating
d. Cumulative, fully participating
e. Cumulative, participating up to 10%
2. Prepare the shareholders’ equity section of JKL Corporation