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CFAS3

The document contains four problems involving recording dividend transactions. Problem 1 involves cash and scrip dividends. Problem 2 involves a property dividend. Problem 3 involves small and large stock dividends. Problem 4 involves allocating cash dividends between preference and ordinary shareholders under different cases.

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32 views

CFAS3

The document contains four problems involving recording dividend transactions. Problem 1 involves cash and scrip dividends. Problem 2 involves a property dividend. Problem 3 involves small and large stock dividends. Problem 4 involves allocating cash dividends between preference and ordinary shareholders under different cases.

Uploaded by

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

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