Chapter 11 shareholders equity part 2 problem 1&2 PDF

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Summary

These are some practice Problems with answers from the book of Milan. year 2020-2021...

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Chapter 11 Shareholders’ Equity (Part 2) PROBLEM 1: TRUE OR FALSE 1. 2.

FALSE TRUE

6. 7.

TRUE FALSE

3.

TRUE

8.

TRUE

4.

FALSE

9.

TRUE

5.

FALSE

10.

TRUE

PROBLEM 2: FOR CLASSROOM DISCUSSION 1. B 2. B 3. B 4. B 5. D 6. C 7. B 8. B 9. A 10.D 11.B 12.D 13.C 14.A 15.C 16.D 17.B 18.A 19.A 20.D

21.Solutions: (1) Dividends (or Retained Earnings) Capital liquidated Dividends Payable

65,000 15,000

(2) Dividends Payable Cash

80,000

80,000

80,000

22.Solutions:

 Requirement (a): Total dividends declared Preferred dividends: Dividends in arrears (6% x 100 x 2,000 x 2 yrs.) Dividend to ordinary shares

200,000 (24,000) 176,000

 Requirement (b): Date of declaration: Retained earnings 200,000 Dividends payable – preference shares Dividends payable – ordinary shares

24,000 176,000

Date of record: No entry Date of distribution: Dividends payable – preference shares Dividends payable – ordinary shares Cash

24,000 176,000 200,000

23.Solutions:

 Requirement (a): (a) Retained earnings (400,000 x 15% x 25) 1,500,000 Share dividends distributable (400,000 x 15% x 20) 1,200,000 Share premium (Additional paid-in capital) 300,000 (b) Memo entry only (c) Retained earnings (400,000 x 100% x 20) 8,000,000 Share dividends distributable (400,000 x 100% x 20)

8,000,000

 Requirement (b): TABLE:

(a) (b) (c)

Outstanding Shares 460,000 800,000 800,000

Common Stock ₱ 9,200,000 ₱ 8,000,000 ₱16,000,000

Additional Paid-In Capital ₱2,700,000 ₱2,400,000 ₱2,400,000

Total Retained Earnings ₱ 9,300,000 ₱10,800,000 ₱ 2,800,000

Stockholders' Equity ₱21,200,000 ₱21,200,000 ₱21,200,000

24.Solution: Aug. 15

Retained Earnings Accumulated Depreciation--Buildings and Equipment

440,000 160,000

Buildings and Equipment 15

15

Capital Stock (₱50 par) Capital Stock (₱20 par) Paid-In Capital from Reduction in Value Paid-In Capital in Excess of Par ... Paid-In Capital from Reduction in Stock Par Value Retained Earnings

600,000 1,600,000 640,000 Stock Par 960,000 320,000 540,000 860,000...