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Assignment 10 MCQ and Problem Solving

The document consists of a series of accounting problems related to dividends, including cash and property dividends, stock dividends, and their effects on retained earnings and shareholders' equity. It presents multiple-choice questions regarding the impact of these dividends on financial statements for various companies. Additionally, it includes specific scenarios involving the declaration and payment of dividends, requiring calculations based on given values.

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Carl Elmo Bernardo Muros
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59 views2 pages

Assignment 10 MCQ and Problem Solving

The document consists of a series of accounting problems related to dividends, including cash and property dividends, stock dividends, and their effects on retained earnings and shareholders' equity. It presents multiple-choice questions regarding the impact of these dividends on financial statements for various companies. Additionally, it includes specific scenarios involving the declaration and payment of dividends, requiring calculations based on given values.

Uploaded by

Carl Elmo Bernardo Muros
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

ASSIGNMENT 10

1. A company declared a cash dividend on its ordinary share capital in December 2014, payable
in January 2015. Retained Earnings would ______________________________
a. increase on the date of declaration
b. not be affected on the date of declaration
c. not be affected on the date of payment
d. decrease on the date of payment

2. On March 20, 2021, CCC Corp. declared the distribution of the following dividend to its
shareholders of record as of March 31, 2021.
Investment in 100 shares of AAA Corp. stock, carrying value and fair value, P600,000

The entry to record the declaration of the property dividend would include a debit to Retained
Earnings of
a. P 600,000
b. P 650,000
c. P 850,000
d. P1,575,000

3. The shareholders' equity section of KKK Corp. as of December 31, 2021 contained the
following accounts:

Ordinary Share Capital, 25,000 shares authorized,


10,000 shares issued and outstanding P 30,000
Ordinary Share Premium 40,000
Retained Earnings 80,000
P 150,000

KKK's board of directors declared a 10% stock dividend on April 1, 2022 when the market value
of the share capital was P7 per share. Accordingly, 1,000 new shares were issued. All of KKK's
shares has a par value of P3 per share. KKK incurred a loss of P12,000 for the first three
months.

What is the balance of the Retained Earnings accounts as of April 1, 2022?


a. P61,000
b. P64,000
c. P68,000
d. P73,000

4. On April 8, 2021, Zambales Corp. declared and issued a 25% ordinary share capital dividend.
Prior to this date, Zambales had 20,000 shares of P2 par value ordinary share that were both
issued and outstanding. The carrying value of each share of stock is P20 at the time of
declaration of the dividend.

As a result of the share capital dividend, how much will be debited to Retained Earnings?
a. P 10,000
b. P 75,000
c. P 40,000
d. P100,000

5. Using the information above, what is the effect of the share capital dividend on total
shareholders' equity?
a. Decreased by P40,000
b. Decreased by P10,000
c. Increased by P100,000
d. Did not change
6. Milkyway Company, a real estate developer, is owned by five founding shareholders. On
December 1, 2021, the entity declared a property dividend of a "one-bedroom flat" for each
shareholder. The property dividend is payable on January 31, 2022.

On December 1, 2021, the carrying amount of a one-bedroom flat is P1,000,000 and the fair
value is P1,500,000. However, the fair value is P1,800,000 on December 31, 2021 and
P1,900,000 on January 31, 2022.

1. What is the dividend payable on December 1, 2021?


a. 5,000,000
b. 7,500,000
c. 9,000,000
d. 0

2. What is the dividend payable on December 31, 2021?


a. 5,000,000
b. 7,500,000
c. 9,000,000
d. 0

3. What amount of gain is included in profit or loss as a result of the settlement of the property
dividend on January 31, 2022?
a. 2,500,000
b. 4,000,000
c. 2,000,000
d. 4,500,000

PROBLEM #1

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