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3. Dividends are distribution to shareholders of corporate earnings in proportion to the number of shares held by them. Dividends may also be paid as a return of shareholders invested capital
(liquidating dividends).
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d. Share dividends dividend that is distributable in the form of companys own stock.
10. Cash Dividends Payable is shown as a current liability under the liabilities section of the statement of financial position.
1 C 6 E
2 J 7 L
3 M 8 D
4 K 9 O
5 N 10 H
2
Journal Entries
Exercise 8 - 3
Jan 15 Accumulated profits 10,000
Cash dividends payable 10,000
Feb 15 No entry
Feb 15 No entry
Exercise 8 - 4
DOD Accumulated profits 40,000
Share Dividend Distributable-Ordinary 10,000
Share Premium-Ordinary Share Dividend 30,000
DOR No entry
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Exercise 8 - 5
DOD Accumulated profits 30,000
Share Dividend Distributable-Ordinary 30,000
DOR No entry
Exercise 8 - 6
A
DOD Accumulated profits 28,000
Cash Dividends Payable Preference 5,000
Cash Dividends Payable Ordinary 23,000
Preferenc
e Ordinary Total
Preference (10,000x 5%
x P10) 5,000 5,000
Ordinary (28,000-5,000) 23,000 23,000
Cash dividends 5,000 23,000 28,000
Divided by Outstanding
shares 10,000 40,000
4
0.
Dividend per share 50 0.58
B
DOD Accumulated profits 28,000
Cash Dividends Payable Preference 15,000
Cash Dividends Payable Ordinary 13,000
Preferenc
e Ordinary Total
Preference (10,000x 5% x P10
x 3 yrs) 15,000 15,000
Ordinary (28,000-5,000) 13,000 13,000
Cash dividends 15,000 13,000 28,000
Divided by Outstanding shares 10,000 40,000
Dividend per share 1.50 0.33
C
DOD Accumulated profits 28,000
Cash Dividends Payable Preference 9,333.33
Cash Dividends Payable Ordinary 18,666.67
5
Cash Dividends Payable Ordinary 18,666.67
Cash 28,000
Preferenc
e Ordinary Total
Preference (10,000x 5% x
P10 ) 5,000 5,000
Ordinary (40,000x5% xP5) 10,000 10,000
Balance (28,000-15,000)
Preference (13,000x
100/300 ) 4333.33
Ordinary (13,000 x
200/300) 8,667 13,000
9,333. 18,666
33 .67 28,000
Divided by Outstanding
shares 10,000 40,000
Dividend per share 0.93 0.47
D
DOD Accumulated profits 28,000
Cash Dividends Payable Preference 16,000
Cash Dividends Payable Ordinary 12,000
6
e
Preference (10,000x 5% x
P10x3 ) 15,000 15,000
Ordinary (40,000x5% xP5) 10,000 10,000
Balance (28,000-25,000)
Preference (3,000x
100/300 ) 1000
Ordinary (3,000 x 200/300) 2000 3,000
Cash dividend 16000 12000 28,000
Divided by Outstanding
shares 10,000 40,000
Dividend per share 1.60 0.28
Case 8 1
Issued shares 40,000
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Decrease on Total Assets P175,000
==========
Case 8 2
c) Decrease of P150,000
Case 8 3
8
Debited to Accumulated P80,00
profits 0
b) 16,000 shares
e) P200,000 cash
g) Cash dividend
Case 8 4
1,500,0
a) Accumulated profits, January 1 P 00
2,300,0
Sub-total P 00
9
Less: Cash dividends P 190,000
Case 8 5
b) NO EFFECT
C) NO EFFECT
d)
d) Purpose of appropriation of accumulated profits
1) to comply with legal
requirements
2) to comply with contractual
requirements
3) upon discretion of
management
e) The corporation was done with the appropriation
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