PARTNERSHIP AND CORPORATION

DIVIDENDS

Course and Section: BSBA

Subject: Partnership and Corporation

1. The CBA Corporation’s board of directors declared a P1 cash dividend for every
share held to outstanding shareholders. What is the balance of the total
shareholders’ equity after the date of declaration?

Balances
Balances after
Declared P1 per(outstanding) share cash
before Dividends dividends
dividends
dividends declared and declared and
paid paid
Cash -150,000
Cash dividends Payable 0
Ordinary Shares, 150,000 shares issued, P15
2,250,000
par 2,250,000
Share Premium 300,000 300,000
Retained Earnings 580,000 -150,000 430,000
Total Shareholders' Equity 3,130,000 -150,000 2,980,000

Entries:
Retained Earnings 150,000
Cash Dividends Payable 150,000

Cash Dividends Payable 150,000

Cash 150,000

Dividend per share 1.00

2. The effect on the balance of Total Shareholders' Equity between the date of
declaration and date of payment after the board of directors declared a 25% share
dividend and a 10% share dividend.

25% Share Dividend

Large dividends: 20% or more based Before 25% Share After share
on outstanding shares use Par Value distribution of declaration and distribution
new shares distribution
Ordinary Shares, 400,000 shares 2,250,000.00 562,500.00 2,812,500.00
authorized, 150,000 shares issued and
outstanding, P15 par
Share Premium 300,000.00 300,000.00
Retained Earnings 580,000.00 -562,500.00 17,500.00
Total Shareholders' Equity 3,130,000.00 0.00 3,130,000.00
No. of shares authorized 400,000 400,000
No. of shares issued and outstanding 150,000 37,500 187,500

Entries:
Retained Earnings 562,500.00
Share Distributable 562,500.00

Share Distributable 562,500.00

Ordinary Shares 562,500.00
10% Share Dividend

Small dividends: Less than 20% based Before 10% Share After share
on outstanding shares, use FMV distribution of declaration and distribution
new shares distribution, FMV
at P30
Ordinary Shares, 400,000 shares 2,250,000.00 225,000.00 2,475,000.00
authorized, 150,000 shares issued and
outstanding, P15 par
Share Premium 300,000.00 225,000.00 525,000.00
Retained Earnings 580,000.00 -450,000.00 130,000.00
Total Shareholders' Equity 3,130,000.00 0.00 3,130,000.00
No. of shares authorized 400,000 100,000
No. of shares issued and outstanding 150,000 15,000 165,000

Entries:
Retained Earnings 450,000.00
Share Distributable (at par 225,000.00
value)
Share Premium 225,000.00

Share Distributable 225,000.00

Ordinary Shares 225,000.00
3. The CBA Corporation’s board of directors declared a 3:1 share split. How many
shares are outstanding after issuance of the new shares?

Share Split: Increasing the number of Before share Declared 3:1 After share split
shares authorized, issued, outstanding split share split
and treasury with corresponding
decrease in Par Value per share
Ordinary Shares, 400,000 shares 2,250,000.00 2,250,000.00
authorized, 150,000 shares issued, P15
par
Share Premium 300,000.00 300,000.00
Retained Earnings 580,000.00 580,000.00
Balance 3,130,000.00 0.00 3,130,000.00
Treasury Stock, 1,000 shares 16,000.00 16,000.00
Total Shareholders' Equity 3,114,000.00 0.00 3,114,000.00
No. of shares authorized 400,000.00 1,200,000.00 1,600,000.00
No. of shares issued (Issued = 150,000.00 450,000.00 600,000.00
Outstanding + Treasury)
No. of shares outstanding 149,000.00 447,000.00 596,000.00
No. of shares in treasury 1,000.00 3,000.00 4,000.00
Par Value 15.00 15.00
Cost of Treasury Stock per share 16.00 16.00

Entries:

The board of directors declared a 3:1 share split.

No changes in account balances
Increase in no. of shares authorized, issued, outstanding and in
treasury
Decrease in par values and cost per share of treasury stock
4. The CBA Corporation’s board of directors declared a 3:1 share split. Before the share
split, the shareholders’ equity included Treasury shares, 20,000 shares at P15 per
share, P300,000. After the share split, the entity sold 20,000 treasury stock at P15 per
share. What is the balance of the total shareholders’ equity after the share split and
selling the 20,000 treasury stock?

Share Split: Increasing the number of Before share Declared 3:1 After share split
shares authorized, issued, outstanding split share split
and treasury with corresponding
decrease in Par Value per share
Ordinary Shares, 400,000 shares 1,800,000.00 1,800,000.00
authorized, 150,000 shares issued, P12
par
Share Premium 300,000.00 300,000.00
Retained Earnings 580,000.00 580,000.00
Balance 2,680,000.00 0.00 2,680,000.00
20,000 Treasury shares at P15 per 300,000.00 300,000.00
share, P300,000 (Given)
Sold Treasury Shares -300,000.00
Total Shareholders' Equity 2,380,000.00 0.00 2,080,000.00
No. of shares authorized 400,000.00 1,200,000.00 1,600,000.00
No. of shares issued (Issued = 150,000.00 450,000.00 600,000.00
Outstanding + Treasury)
No. of shares outstanding 130,000.00 390,000.00 520,000.00
No. of shares in treasury 20,000.00 60,000.00 80,000.00
Sold shares after split 20,000.00
Par Value 12.00
Cost of Treasury Stock per share 15.00

Remaining no of shares in treasury 60,000.00

(after sale)
No of shares issued (after sale) 580,000.00
5. At December 31, 2023, CBA Corporation’s shareholders’ equity included P100 par
value 8% Preference Cumulative shares, 2 years in arrears; P10 par value Ordinary
Shares, Share Premium, Retained Earnings, and Treasury Ordinary shares, 20,000
shares at P15 per share. The board of directors declared P400,000 cash dividend.
Compute the cash dividend per preference share and per ordinary share.

Declared P200,000 cash dividends, Balances Dividends Balances after

Preference shares are cumulative before declared and dividends
and non-participating; dividends are dividends paid declared and
2 years in arrears. paid
Cash -400,000.00
Cash dividends Payable 0.00
8% Preference Shares, 15,000 shares, 1,500,000.00 1,500,000.00
P100
Ordinary Shares, 50,000 shares, P10 500,000.00 500,000.00
par
Share Premium 300,000.00 300,000.00
Retained Earnings 580,000.00 -400,000.00 180,000.00
Balance 2,880,000.00 -400,000.00 2,480,000.00
Treasury (20,000 shares at P15) 300,000.00
Total Shareholders' Equity 2,580,000.00 -400,000.00 2,480,000.00

Preference Ordinary Total

2 years arrears 240,000.00 240,000.00
Current year 120,000.00 40,000.00 160,000.00
Non-Participating 0.00 0.00 0.00
Total 360,000.00 40,000.00 400,000.00
Dividend per share 24.00 0.80

Entries:
Retained Earnings 400,000.00
Cash Dividends Payable 400,000.00

Cash Dividends Payable 400,000.00

Cash 400,000.00
6. At December 31, 2023, CBA Corporation’s shareholders’ equity included P100 par
value 8% Preference Cumulative shares, 2 years in arrears; P10 par value Ordinary
Shares, Share Premium; Retained Earnings, and Treasury Ordinary shares, 20,000
shares at P15 per share. Compute the book values per preference share and per
ordinary share.

8% Cumulative Preference Shares, 15,000

1,500,000
shares, P100, 2 years in arrears
Ordinary Shares, 50,000 shares, P10 par 500,000
Share Premium - Preference 180,000
Share Premium - Ordinary 120,000
Retained Earnings 580,000
Total Shareholders' Equity 2,880,000

No liquidation value; use par value per

preference share.
Preference equity 1,860,000
Par value per preference share 1,500,000
Dividends in arrears 240,000
Dividend for the current year 120,000
Book value per preference share 124.00
Ordinary equity 1,020,000
Book value per ordinary share 20.40