Share Dividends and Share Splits

Assume the following data:

Ordinary Shares, P100 par value, 50,000 shares issuedP5,000,000

Share premiumP200,000

Retained earningsP2,000,000

Market value (declaration date)P150

Market value (distribution date)P170

Required:

1. For each of the following assumptions, prepare entries on the date of declaration, date of payment and share split:

Case 1. A 20% share dividends is declared on ordinary shares. After the shares were distributed, the board of directors declared a 2-for-1 share split.

Case 2. A 10% share dividends is declared on ordinary shares. After the shares were distributed, the board of directors declared a 1-for-2 reverse split.

2. How many shares of stocks were outstanding after the splits for Case 1 and Case 2.