Problem 1 (Cash and Scrip Dividends)
Requirement: Record the transactions occurred during 2019.
April 1 Retained Earnings 950,000
Dividend Payable
Sept 30 Interest Expense 28,500
Interest Payable
Dividend Payable 950,000
Note Payable
Nov 10 Retained Earnings 570,000
Dividend Payable
Dec 15 Dividend Payable 570,000
Cash
Problem 2 (Property Dividend)
Requirement:
1. Journalize the transactions occurred in relation to property dividends.
2. What will be the gain or loss on January 5, 2021?
Dec 15 Property Dividend Payable 900,000
Investment in JFC Corporation
Dec 30 NO ENTRY
Jan 5 Common Stock Divident Distributable 900,000
Investment in JFC Corporation
Problem 3 (Small and Large Stock Dividends)
Requirement:
Prepare all the necessary entries to record the transaction of share capital dividends using the following indepen
1. A 15% share capital dividend 37,500
2. A 25% share capital dividend 62,500
1. A 15% share capital dividend
Nov 7 Retained Earnings 750,000
Dividend Payable
Dec 5 Dividend Payable 750,000
Share Capital
2. A 25% share capital dividend
Nov 7 Retained Earnings 1,250,000
Dividend Payable
Dec 5 Dividend Payable 1,250,000
Share Capital
Problem 4 (Allocation of Cash Dividends to Preference and Ordinary Shareholders)
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
Case B. Preference share capital is CUMULATIVE and NON-PARTICIPATING
Case C. Preference share capital is NON-CUMULATIVE and FULLY PARTICIPATING
Case D. Preference share capital is NON-CUMULATIVE and PARTICIPATING UP TO ADDITION
3. Assuming the dividend declared is P 1,000,000 what will be the allocation of dividends if in case the prefe
For dividend transactions
Dec 10 Retained Earnings 1,500,000
Dividends Payable
Dec 21 NO ENTRY
Jan 5 Dividends Payable 1,500,000
Cash
For allocation of dividends
Case A: Preference share capital is NON-CUMULATIVE and NON-PARTICIPATING
Preference Shares 240,000
Ordinary Shares 1,260,000
Case B: Preference share capital is CUMULATIVE and NON-PARTICIPATING
Preference Shares 240,000
Ordinary Shares 1,260,000
Case C: Preference share capital is NON-CUMULATIVE and FULLY PARTICIPATING
Preference Shares 240,000
Ordinary Shares 1,260,000
Case D: Preference share capital is NON-CUMULATIVE and PARTICIPATING UP TO
Preference Shares 240,000
Ordinary Shares 1,260,000
3. Assuming the dividend declared is P 1,000,000 what will be the allocation of dividends if in cas
Preference Shares 240,000
Remaining amount for participation 760,000
Participation of preferences shareholders 760,000
Ordinary shares 240,000
950,000
28,500
978,500
570,000
570,000
Gain or Loss per share
900,000 Fair market value on January 5, 2021 66
Less: Fair market value on December 15, 2020 65
1
Total Gain or Loss
Gain or Loss per share 1
Multiply: Total number of shares distributed 15,000
15,000
900,000 Since the fair market value increased from P65 to P66 per
share, there will be a gain of P15,000 on January 5, 2021.
ing the following independent assumptions:
750,000
750,000
1,250,000
1,250,000
TICIPATING
RTICIPATING
ATING UP TO ADDITIONAL 5%
idends if in case the preference share is CUMULATIVE and FULLY PARTICIPATING
1,500,000
1,500,000
NON-PARTICIPATING
ARTICIPATING
ULLY PARTICIPATING
ARTICIPATING UP TO ADDITIONAL 5%
ation of dividends if in case the preference share is CUMULATIVE and FULLY PARTICIPATING
