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QUIZ 1 Multiple choice: Write the correct letter 1. A distribution of earned profits in the form of cash, property or stock. a. Dividend b.

QUIZ 1

Multiple choice: Write the correct letter

1. A distribution of earned profits in the form of cash, property or stock.

a. Dividend

b. Retained Earnings

c. Appropriation

d. Capital Stock

2. Which one does not decrease retained earnings?

a. Net Income

b. Appropriation

c. Dividends

d. Net Loss

3. Which one does not decrease assets at the distribution date?

a. Cash Dividend

b. Property Dividend

c. Scrip Dividend

d. Stock Dividend

4. Which one does not effect total stockholders' equity?

a. Cash Dividend

b. Property Dividend

c. Scrip Dividend

d. Stock Dividend

5. Which one is not a liability account?

a. Cash dividend payable

b. Property dividend payable

c. Stock Dividend payable

d. Scrip Dividend payable

6. Who are entitled to dividends?

a. Issued shares

b. Outstanding and subscribed shares

c. Issued and subscribed shares

d. Issued and outstanding shares

7. The following conditions must be present for cash dividends to be distributed except

a. Sufficient retained earnings

b. Sufficient unissued shares

c. Declaration by the Board of Directors

d. Sufficient cash

8. An example of a voluntary appropriation is an appropriation for

a. Treasury share

b. Bond redemption

c. Machine acquisition

d. Stock redemption

9. A dividend declared out of the investment in stocks of other companies is a

a. Property Dividend

b. Stock Dividend

c. Scrip Dividend

d. Non-Cash dividend

10. If the excess dividends are distributed to both common and preferred stockholders, the preferred shares are presumed to be

a. Callable

b. Cumulative

c. Participating

d. B and C

11. Stocks were sold for cash to 10,000 stockholders on March 1, 2012. The Board of Directors declared a cash dividend of P10 on November 30 to stockholders on record as of December 15, payable on December 20. The accountant should not give an entry on.

a. March 1

b. November 30

c. December 15

d. December 20

12. If a shareholder receives additional shares as stock dividend, his right over the corporation will increase

a. True

b. False

13. The formula to determine the net income that accrues to the shareholders per share of stock is the

a. Earnings per share

b. Market value per share

c. Book value per share

d. Price-earnings ratio

14. The net worth of a share of stock is represented by the

a. Earnings per share

b. Book value per share

c. Market value per share

d. Par value per share

15. This formula evaluates the attractiveness of the stock since one could relate the cost of buying a share against how much a share earns in profit.

a. Earnings per share

b. Market share

c. Book value

d. Price-earnings ratio

16. A dividend payable in merchandise is called a

a. Merchandise dividend

b. Property dividend

c. Stock dividend

d. Cash dividend

17. WGA Corp. declared a 10% cash dividend on December 1 payable to shareholders on record as of December 31. A shareholder with 100 shares of a P10 par stock who bought another 100 shares on December 15 will receive

a. P100

b. P200

c. P1,000

d. P2,000

18. Power Corporation declared a property dividend of 10 Meralco shares for one Power share held. Power share has a par value of P50 and a market value of P100. The Meralco shares were originally purchased at P10 per share. Its fair market value on declaration date was P20 and on distribution date was P25. Dividends should be recorded at

a. P25

b. P100

c. P10

d. P20

19. Pretty Corporation declared a 10% stock dividend. Par Value of its stock is P100 while the fair market value at declaration date was P150 and at distribution date was P175. Retained Earnings should be debited for

a. P150

b . P100

c. P175

d. P15

20. Dividend in arrears are distributed to preferred stockholders

a. Only when there is a declaration

b. If it is a cumulative stock

c. If it is a participating stock

d. Both a and b

QUIZ 2

Place Inc. a dealer in computers and computer software ends its accounting period on December 31. Use the information below to close its books.

Cash. P219,000

Marketable

Securities. P135,000

Merchandise

Inventory. P350,000

Furniture &

Equipment (net) P320,500

Accounts payable. P27,500

Share Capital (P100 par). P500,00

Treasury Shares (1,000) (120,000)

Retained Earnings 420,000

Sales. 662,500

Purchases. P370,000

Selling Expenses. 70,500

Administrative

Expenses. 25,000

P1,490,000. P1,490,000

Unsold goods on December 31 represents 1/3 of the total goods available for sale. Aside from the closing entries, two transactions are not yet recorded by the accountant:

A 20% stock dividend declaration

on December 15

A 10% cash dividend declaration

on December 31

An appropriation for treasury shares

on December 31

Required:

1. Entries to record the dividends and appropriation and the closing entries.

2. Give a statement of financial position as at December 31 supported by a statement of retained earnings.

QUIZ 3

A. The following information are made available to you on December 31, 2012

Liabilities P2,000,000

Share Capital, P100 par,

issued. P1,000,000

Subscribed Share Capital P500,000

Share Premium P300,000

Paid In Capital from

Treasury Shares. P5,000

Retained Earnings,

Unappropriated. P500,000

Retained Earnings,

Appropriated for

Treasury Shares. P150,000

Treasury Shares

(1,000 shares). P150,000

In each of the following independent situations, prepare journal entries.

a. The Board of Directors distributed a 10% cash dividend.

b. The Board of Directors declared a property dividend of P20 worth of merchandise for every share of stock. The merchandise is worth P25 in the market.

c. The Board of Directors declared a scrip dividend of P25 per share payable after one year at 18%.

d. 500 treasury shares were sold at P125 per share.

e. 500 treasury shares were retired.

Particulars. Debit. Credit

a.

b.

c.

d.

e.

2. Combining situations a, d and e, present a revised shareholders' equity:

QUIZ 4

Brown Inc. has been operating or five years. The following selected stock transactions occured for 2012

Jan 1 Issued 10,000 shares @P150.

Par value is P100.

4 Declared a cash dividend of

P500,000.

Feb. 5 Received 200 donated shares

18 Sold the donated shares for

P150,000.

June 28 Purchased 1,000 shares of

treasury stock at P120 per

share. Appropriated Retained

Earnings for treasury stock

was set up.

Sept. 6 Sold 400 shares of the

treasury stock for P125 per

share.

Reduced corresponding

appropriation.

15 Retained Earnings

appropriated for Plant

Expansion, with a beginning

balance of P500,000, was

increased to P700,000.

Dec. 31 Available for sale securities of

the company representing

BPI's ALFM of 1, 000 units

increased its fair value by P50.

Net income earned, P600,000.

Instructions:

1. Give a Journal entries:

2. Using the accompanying chart, give a statement of changes in stockholders' equity. The beginning balances are already given.

Share. Share

Date. Capital. Premium

Jan 1. P3,000,000. P1,000,000

Unappropriated

Retained Earnings. Reserves

P1,800,000. P500,000

Treasury

Shares

QUIZ 5

Master Inc. was organized on April 1, 2012, with authority to issue 50,000 no par ordinary shares and 15,000 14% preference shares, P500 par value. The following transactions occured in 2012 in this sequence:

a. Issued 4,000 shares of preferred stock at P550 per share.

b. Issued 16,500 shares of ordinary stock for cash at P150 per share.

c. Issued 200 shares of ordinary stock in lieu of a P20,000 fee to the corporation's legal counsel for drafting the articles of incorporation and a set off by laws.

d. Acquired 1,000 shares of ordinary stock for P100,000.

e. Reissued the 500 treasury shares at P120 per share.

f. Paid semi-annual cash dividend on preferred stock and P30 per share cash dividend on ordinary stock.

g. Remaining treasury shares were retired.

h. The city board of Angeles passed a resolution donating a piece of land valued at P500,000 where A factory shall be set up by the firm, giving additional employment for the city workers.

i. Closed the end-of-year credit balance of P3,200,000 of the Income Summary account.

Direction: Prepare the journal entries without explanation to record the transactions using letters in place of dates. Present a shareholders' equity section as at December 31.

Date. Particulars. Debit. Credit

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