Corporation Accounting: Retained Earnings

NAME: SECTION: SCORE: PROFESSOR: Multiple Choice 1. Cebedo Corp. issued 100,000 ordinary shares. Of these, 5,000 were held as treasury stock at Dec. 31, 2018. During 2019, transactions involving Cebedo's ordinary shares were as follows: May 3 1,000 shares of treasury stock were sold. Aug. 6 10,000 shares of previously unissued share were sold. Nov. 18 A 2-for-1 share split took effect. At Dec. 31, 2019, how many ordinary shares are issued and outstanding: Shares Shares Issued Outstanding 220,000 212,000 220,000 216,000 222,000 214,000 222,000 218,000 2. How would total shareholders' equity be affected by the declaration of each of the following? Share Dividends Share Split a. No effect Increase b . Decrease Decrease Decrease No effect No effect No effect 3. The following information pertained to T. Lianza Corporation: Dividends on its 1,000 shares of 6%, P10 par value cumulative preference shares have not been declared for three years. Treasury stock that cost P15,000 was reissued for P8,000. What amount of retained earnings should be appropriated as a result of these items? a. PO b. P1,800 C. P7,000 d. P8,800 7-34 | WIN Ballada's Partnership and Corporation Accounting4. Villanueva Corp.'s statement of financial position reported the following shareholders' equity: 5% Cumulative Preference Shares, P100 par, 2,500 shares issued and outstanding P250,090 Ordinary Shares, P3.50 par, 100,000 shares issued and outstanding 350,000 Share Premium-Ordinary 125,090 Retained Earnings 300,000 Dividends in arrears on the preference shares amounted to P25,000, If Villanueva were to be liquidated, the preference shareholders would receive par value plus a premium of P50,000. The book value per share of ordinary shares is a. P7.75. b. P7.50. c. P7.25. d. P7.00. 5. Coronado Corp. has 700,000 ordinary shares authorized and 300,000 shares outstanding at Dec. 31, 2018. The following events occurred during 2019: Jan. 31 Declared 10% share dividend. June 30 Purchased 100,000 shares. Aug. 1 Reissued 50,000 shares, Nov. 30 Declared 2-for-1 share split. At Dec. 31, 2019, how many outstanding shares did Coronado have? a. 560,000 b. 600,000 C. 630,000 d. 660,000 6. Briones Corp.'s outstanding shares at Dec. 31, 2019, consisted of the following: 30,000 shares of 5% Cumulative Preference Shares, P10 par value, fully participating as to dividends. No dividends were in arrears. 200,000 Ordinary Shares, P1 par value. On Dec. 15, 2019, Briones declared dividends of P100,000. What was the amount of dividends payable to Briones' ordinary shareholders? a. P10,000 b. P34,000 C. P40,000 d. P47,500 Chapter 7: Retained Earnings | 7-357. How would a share split in which the par value per share decreases in proportion to the number of additional shares issued affect each of the following? Share Retained Premium Earnings Increase No effect No effect No effect No effect Decrease Increase Decrease 8. E. Panopio Corp. declared a 5% share dividend on its 10,000 issued and outstanding shares of P2 par value ordinary shares, which had a fair market value of P5 per share before the share dividend was declared. This share dividend was distributed 60 days after the declaration date. By what amount did E. Panopio's current liabilities increase as a result of the share dividend declaration? a. P-0- b. P 500 C. P1,000 d. P2,500 9. A corporation declared a cash dividend on its ordinary shares on Dec. 15, 2018, payable on Jan. 12, 2019. How would this dividend affect shareholders' equity on the following dates? Dec. 15, 2018 Dec. 31, 2018 Jan. 12, 2019 a. Decrease No effect Decrease b. Decrease No effect No effect C. No effect Decrease No effect No effect No effect Decrease 10. At Dec. 31, 2018 and 2019, P. Tulio Corp. had 3,000 shares of P100 par, 5% cumulative preference shares outstanding. No dividends were in arrears as of Dec. 31, 2017. P. Tulio did not declare a dividend during 2018. During 2019, P. Tulio paid a cash dividend of P10,000 on its preference shares. P. Tulio should report dividends in arrears in its 2019 financial statements as a. an accrued liability of P20,000. b. an accrued liability of P15,000. c. a disclosure of P20,000. d. a disclosure of P15,000. 11. On July 1, 2019, Aguila Corp. has 200,000 shares of P10 par ordinary shares outstanding and the market price of the stock is P12 per share. On the same date, Aguila declared a 1-for-2 reverse share split. The par value of the share was increased from P10 to P20 and one new P20 par share was issued for each two P10 7-36 | WIN Ballada's Partnership and Corporation Accounting