Partnership and Corporation

Quiz #2
Finals

What is the dividend payable on December 1, 2011?

What is the dividend payable on December 31, 2011?

1. East Company a calendar year company, had sufficient retained

earnings in 2011 as a basis for dividends but was temporarily
short of cash. East declared a dividend of P1,000,000 on April
1, 2011 and issued a promissory notes (scrip dividends) in lieu
of cash. The notes which are date April 1, 2011, had a maturity
date of March 31, 2012 and a 10% interest rate. The cash
dividends will be aid to stockholders on March 31, 2012.
Prepare the journal entries on the date of declaration, Dec. 31.
2011 and date of payment.

What amount of gain is included in the profit or loss as a result

of the settlement of the property dividend on January 31, 2012?
3. On May 1 of the current year, Sol Companys board of
directors declared a 10% stock dividend. The market value of
Sols 30,000 outstanding shares of P20 par value was P90 per
share on that date. The stock dividend was distributed on July
1, when the market price was P100 per share.
What amount should be credited to the share premium for the
stock dividend?

4. On September 30 of the current year, Grey Company issued

4,000 ordinary shares of P100 par value in connection with a
stock dividend. The market value per share on the date of
declaration was P150. Greys shareholders equity accounts
immediately before the issuance of the stock dividends shares
were as follows:
2. Global Company, a real estate developer, is owned by five
founding shareholders. On December 1, 2011, the entity
declared a property dividend of a one-bedroom flat for each
stockholder. The property dividend is payable on January 31,
2012.
On December 1, 2011, the carrying amount of one-bedroom
flat is P1,000,000 and the fair value is 1,500,000. However, the
fair value is P1,800,000 on December 31,2011 and 1,900,000
on January 31, 2012.
Questions:

Ordinary share, P100 par, 50,000 shares

Authorized, 20,000 shares outstanding
Share premium
Retained Earnings

2,000,000
3,000,000
1,500,000

What is the balance of retained earnings immediately after the

stock dividend?

5. Ray Company declared a 5% stock dividend on its 100,000

issued and outstanding shares of P20 par value, which had a
fair value of P50 per share before the stock dividend was
declared. This stock dividend was distributed 60 days after the
declaration date. What is the increase in current liability as a
result of the stock dividend declaration?
6. Solace Company declared and distributed 10% stock dividend
with fair value of P1,500,000 and par value of 1,000,000, and
25% stock dividend with fair value of P4,000,000 and par
value of P3,500,000. What aggregate amount should be debited
to retained earnings for the stock dividend?

7. The directors of Ontario Company whose P50 par value share

capital is currently selling at P60 per share have decided to
issue a stock dividend. The selling price is not expected to be
affected by the stock dividend. Ontario, which has an
authorization for 1,000,000 shares, issued 500,000 shares, of
which 100,000 shares are now held as treasury. In order to
capitalize P2,400,000 of retained earnings, what percentage
should be declared as stock dividends by the directors?

8. Katrinas board of directors declared a 10% dividend on April

1, 2011 when the market value of the share was P70. The stock
dividend was issued on July 1, 2011 when the market value of
the share was P100. Katrinas share has a par value of P30.
Katrina sustained a net loss of P1,200,000 for 2011. What
amount should be reported as retained earnings on December
31, 2011?

9. Kiara Company provided the following data:

Share Capital (P100 par value)
Share Premium
Retained Earnings

12/31/2011
5,000,000
2,500,000
5,000,000 ?

12/31/2012
5,100,000
2,900,000

During 2012, the entity declared and paid cash dividend of

P750,000 and also declared and issued a stock dividend. There
were no other changes in shares issued and outstanding during
2012. The net income for 2012 was P1,500,000. What is the
balance of retained earnings on December 31, 2012?

10. On January 1, 2012, the board of directors of Blake Mining

Company declared a cash dividend of P800,000 to shareholders
of record on January 15, 2012 and payable on February 15,
2013. Selected data on December 31, 2011 are as follows:
Accumulated Depletion
Share Capital
Share premium
Retained earnings

How much is the liquidating dividend?

200,000
1,000,000
300,000
600,000