Question
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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