WITH SOLUTIONS

1)ABC Corporation was organized on January 1, 2019 with issuance of P100 par value 300,000 ordinary shares at total consideration P33,590,000. During 2019 and 2020, the entity reported net income of P5,527,000 and P2,523,000, respectively. At December 31, 2019 and 2020, the retained earnings showed balances of P4,527,000 and P5,300,000. What is the change in the earnings per share?

1. 18.42
2. 15.09
3. 10.01
4. 5.83

2)On December 31, 2019 ABC Corporation has 100,000 P100 par value ordinary shares outstanding, Share Premium P2,000,000 and Retained Earnings P10,000,000. If in 2020, the entity reported P5,000,000 profit, declared a 2-for-1 share split and followed by 100% share dividend,, what is the amount of legal capital in 2020?

1. P 5,000,000
2. P10,000,000
3. P20,000,000
4. P40,000,000

3)ABC Corporation was organized on January 1, 2019 with issuance of P100 par value 300,000 ordinary shares at total consideration P33,590,000. During 2019 and 2020, the entity reported net income of P5,527,000 and P2,523,000, respectively. At December 31, 2019 and 2020, the retained earnings showed balances of P4,527,000 and P5,300,000. Which of the following is not likely to happen?

1. A 4-for-1 share split
2. Changing from P100 par value to no-par P75 stated value
3. Reduction of P100 par value to P80 par value
4. A 15% share dividend when the market price is P130 per share.

4)On October 1, 2019, ABC Corporation shareholders' equity showed: Ordinary Shares, no-par value, 50,000 shares authorized; 30,000 shares issued and outstanding, P1,290,000;; and Retained Earnings P1,200,000. When the board of directors changes the no-par value ordinary shares to P40-par value, how will this affect the book value per share?

1. Decrease the book value per share.
2. Increase the book value per share.
3. Book value per share will remain the same.
4. The book value per share cannot be determined due to limited information.

5)ABC Corporation was organized on January 1, 2019 with issuance of P100 par value 300,000 ordinary shares at total consideration P33,590,000. During 2019 and 2020, the entity reported net income of P5,527,000 and P2,523,000, respectively. At December 31, 2019 and 2020, the retained earnings showed balances of P4,527,000 and P5,300,000. What is the change in the book value per ordinary share?

1. 129.63
2. 127.06
3. 2.57
4. 17.67

6)On October 1, 2019, ABC Corporation shareholders' equity showed: Ordinary Shares, P100 par value, 50,000 shares authorized; P3,000,000; Share Premium, P120,000; and Retained Earnings P1,200,000 Which of the following is not correct after the declaration of a 2-for-1 share split?

1. The authorized 50,000 shares at P100 par value will now be 100,000 shares at P50 par value.
2. There will be 40,000 unissued ordinary shares
3. The ordinary share, share premium and retained earnings balances will not change.
4. Total outstanding shares will be 60,000 shares at P100 par value.

7)ABC Corporation was organized on January 1, 2019 with issuance of P100 par value 300,000 ordinary shares at total consideration P33,590,000. During 2019 and 2020, the entity reported net income of P5,527,000 and P2,523,000, respectively. At December 31, 2019 and 2020, the retained earnings showed balances of P4,527,000 and P5,300,000. What is the change in the dividend per share?

1. 2.50
2. 5.83
3. 8.41
4. 18.42

8)On October 1, 2019, ABC Corporation shareholders' equity showed: Ordinary Shares, P100 par value, 50,000 shares authorized; P3,000,000; Share Premium, P120,000; and Retained Earnings P1,200,000 Which of the following has least decrease effect on the retained earnings?

1. A 2-for-1 share split, 20% share dividend, P1 cash dividend per share.
2. 20% share dividend, a 2-for-1 share split, P1 cash dividend per share.
3. P1 cash dividend per share, 20% share dividend, a 2-for-1 share split.
4. 20% share dividend, P1 cash dividend per share, a 2-for-1 share split.