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Share Capital and Retained Earnings Analysis

The document contains multiple accounting problems involving the calculation of dividends for different classes of shares and the accounting entries related to share issuances and dividends. It includes problems related to preference shares, ordinary shares, contributed capital, retained earnings, and calculating book values and earnings per share.

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shiroe raabu
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4 views17 pages

Share Capital and Retained Earnings Analysis

The document contains multiple accounting problems involving the calculation of dividends for different classes of shares and the accounting entries related to share issuances and dividends. It includes problems related to preference shares, ordinary shares, contributed capital, retained earnings, and calculating book values and earnings per share.

Uploaded by

shiroe raabu
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd

Problem 1

Instruction 1
2014
Jan-02 Cash 3,125,000
Ordinary Share Capital 2,500,000
Ordinary Share Premium 625,000
#
Mar-02 Cash 1,875,000
Ordinary Share Capital 1,250,000
Ordinary Share Premium 625,000
#
Mar-31 Land 300,000
Building 500,000
Ordinary Share Capital 500,000
Ordinary Share Premium 300,000
#
Dec-31 Income Summary 750,000
Retained Earnings 750,000
#
Dec-31 Retained Earnings 531,250
Cash Dividend Distributable 531,250

2015
Jan-31 Cash Dividend Payable 531,250
Cash 531,250
#
Feb-14 OSC Subscription Receivable 2,500,000
OSC Subsribed 1,000,000
Ordinary Share Premium 1,500,000

Cash 1,000,000
OSC Subscription Receivable 1,000,000
#
Mar-15 Cash 1,500,000
OSC Subscription Receivable 1,500,000

OSC Subscribed 1,000,000


Ordinary Share Capital 1,000,000
#
Dec-31 Income Summary 2,000,000
Retained Earnings 2,000,000
#
Dec-31 Retained Earnings 525,000
Cash Dividend Payable 525,000
Retained Earnings 626,250
Share Capital Dividend Payable 525,000
PIC from Share Capital Dividend 131,250

Problem 2
MMM Corporation
2013 OSC OSC PREMIUM RETAINED EARNINGS
Issuance of OSC
(120,000 @ 24) 2,400,000 480,000
Loss for the Year -300,000
2,400,000 480,000 -300,000

2014 OSC OSC PREMIUM RETAINED EARNINGS


Issuance of OSC
(80,000 @ 30) 1,600,000 800,000
Profit for the Year 800,000
4,000,000 1,280,000 500,000

Contributed Capital:
Ordinary share Capital, P20 par, 200,000 shares authorized,
200,000 shares issued and outstanding
Ordinary Share Premium
Total Contributed Capital
Retained Earnings
Total Shareholder's Equity

Problem 4
Non-cumulative and fully participating
2012 Preference Ordinary Total
Regular dividends:
Preference 200,000
Ordinary 100,000 300,000
Balance - 150,000
Preference - 2M/3M 100,000
Ordinary - 1M/3M 50,000 150,000
300,000 150,000 450,000

Dividend per share


PSC OSC
300,000/20,000 = 15 150,000/50,000 = 3

Cumulative and non-participating


2012 Preference Ordinary
Dividend in arrear
200,000*2 400,000
Dividend for the year
Required 200,000
Available 50,000 50,000
In arrears, end of 2012 150,000
450,000

Dividend per share


PSC
450,000/20,000 = 22.5

Cumulative and participating


2012 Preference Ordinary
Dividend in arrear
80,000*3 240,000
Dividend for the year 80,000 40,000
Balance - 90,000
Preference - 1M/1.5M 60,000
Ordinary - 500k/1.5M 30,000
380,000 70,000

Dividend per share


PSC OSC
380,000/10,000 = 38 70,000/10,000 = 7

Cumulative and participating up to and additional 5%


2012 Preference Ordinary
Dividend in arrear
80,000*3 240,000
Regular dividends:
Preference 80,000
Ordinary 40,000
Balance - 90,000
Preference - Maximum of 50,000 50,000
Ordinary 40,000
370,000 80,000

Dividend per share


PSC OSC
370,000/10,000 = 37 80,000/10,000 = 8

Problem 5
1 Total Shareholders' Equity 2,300,000
Equity Identified with PSC 300,000
Equity Identified with OSC 2,000,000

Book Value per Share


PSC - 300,000/10,000 = 30
OSC - 2,000,000/100,000 = 20

2 Total Shareholders' Equity 2,300,000


Equity Identified with PSC
Liquidation Value 250,000
Dividend in arrear 125,000 375,000
Equity Identified with OSC 1,925,000

Book Value per Share


PSC - 375,000/10,000 = 37.5
OSC - 1,925,000/100,000 = 19.25

Problem 6
a. Profit
Less Earnings identified with PS (10,000 sh @ P25 x 10%)
Earnings identified with OS

b. Profit
Less Earnings identified with PS (10,000 sh @ P25 x 10%)
Earnings identified with OS

Earnings per share


P50,000 / 100,000 = P0.50

c. Profit
Less Earnings identified with PS (10,000 sh @ P25 x 10%)
Earnings identified with OS
Earnings per share
P95,000 / 100,000 = P0.95

d. Profit
Less Earnings identified with PS (10,000 sh @ P25 x 10%)
Earnings identified with OS

Earnings per share


P275,000 / 100,000 = P2.75

Problem 7
Contributed Capital:
Share Capital
10% Preference Share, P100 par,
cumulative 25,000 shares authorized
12,000 shares issued and outstanding 1,200,000
Ordinary Shares, P10, 500,000 shares
authorized, 300,000 issued and outstanding 3,000,000
OS Dividend Distributable
PIC from Stock Dividend
Ordinary Share Capital Subscribed
Additional Paid-in Capital:
Preference Share Premium 120,000
Ordinary Share Premium 300,000
Total Contributed Capital
Retained Earnings
Appropriated for contingencies 250,000
Appropriated for Bond Retirement 300,000
Total 550,000
Unappropriated Retained Earnings 145,000
Total Shareholders' Equity
Instruction 2
Contributed Capital:
Ordinary share Capital, P20 par, 500,000 shares authorized,
212,500 shares issued and outstanding
Ordinary Share Premium
Total Contributed Capital
Retained Earnings
Total Shareholder's Equity

Insruction 3
OSC OSC PREMIUM RETAINED EARNINGS
Balance, January 2 2,500,000 625,000
Issuance of OSC
(62,500 shares @ 30) 1,250,000 625,000
Land and Building
(25,000 @ 20) 500,000 300,000
Profit for the Year 750,000
Declared cash dividend -531,250
4,250,000 1,550,000 218,750
VVV Incorporation
ED EARNINGS TOTAL 2013 PSC PSC Premium
Issuance for PSC
2,880,000 (6,000 @ 120) 600,000 120,000
300,000 -300,000 Issuance for OSC
300,000 2,580,000 (200,000 @ 7)
Profit for the Year
ED EARNINGS TOTAL Declared cash dividend
PSC Declared Dividends
2,400,000 OSC Declared Dividends
00,000 800,000 600,000 120,000
00,000 5,780,000
2014 PSC PSC Premium
Issuance for PSC
(5,000 @ 130) 500,000 150,000
4,000,000 Issuance for OSC
1,280,000 (100,000 @ 10)
5,280,000 Profit for the Year
500,000 Declared cash dividend
5,780,000 PSC Declared Dividends
OSC Declared Dividends
1,100,000 270,000

Contributed Capital:
Ordinary share Capital, no par, no stated, 500,000 shares authorized,
300,000 shares issued and outstanding
5% Preference Share Capital, P100 par, 20,000 shares authorized
11,000 shares issued and outstanding
Preference Share Premium
Total Contributed Capital
Retained Earnings
Total Shareholder's Equity

2013 Preference Ordinary Total


Regular dividends:
Preference 200,000
Ordinary 100,000 300,000
Balance - 450,000
Preference - 2M/3M 300,000
Ordinary - 1M/3M 150,000 450,000
500,000 250,000 750,000

Dividend per share


PSC OSC
500,000/20,000 = 25 250,000/50,000 = 5

Total 2013 Preference Ordinary Total


Dividend in arrear 150,000 150,000
400,000 Dividend for the year 200,000 200,000
Balance - to OSC 400,000 400,000
350,000 400,000 750,000
50,000
Dividend per share
450,000 PSC OSC
350,000/20,000 = 17.5 400,000/50,000 = 8

Total 2013 Preference Ordinary Total


Dividend for the year 80,000 40,000 120,000
240,000 Balance - 630,000
120,000 Preference - 1M/1.5M 420,000
Ordinary - 500k/1.5M 210,000 630,000
500,000 250,000 750,000
90,000
450,000 Dividend per share
PSC OSC
500,000/10,000 = 50 250,000/10,000 = 25

Total 2013 Preference Ordinary


Regular dividends:
240,000 Preference 80,000
Ordinary 40,000
Balance - 630,000
120,000 Preference - Maximum of 50,000 50,000
Ordinary 580,000
130,000 620,000
90,000
450,000 Dividend per share
PSC OSC
130,000/10,000 = 13 620,000/10,000 = 62

2012 Preference
Dividend in arrear
80,000*3 48,000
Dividend for the year 24,000
Balance - 63,000
Preference - 300k/900k 21,000
Ordinary - 600k/900k
93,000

20,000
20,000
0

75,000
25,000
50,000

120,000
25,000
95,000
300,000
25,000
275,000

4,200,000
350,000
105,000
100,000
Retained Earnings
OS Dividend Distributable
420,000 PIC from Stock Dividend
5,175,000

695,000
5,870,000
4,250,000
1,550,000
5,800,000
218,750
6,018,750

ED EARNINGS TOTAL
3,125,000

1,875,000

800,000
50,000 750,000
531,250 -531,250
18,750 6,018,750
OSC OSC PREMIUM RETAINED EARNINGS TOTAL

720,000

1,400,000 1,400,000
240,000 240,000

-30,000 -30,000
-50,000 -50,000
1,400,000 160,000 2,280,000

OSC OSC PREMIUM RETAINED EARNINGS TOTAL

650,000

1,000,000 1,000,000
600,000 600,000

-55,000 -55,000
-150,000 -150,000
2,400,000 555,000 4,325,000

0,000 shares authorized,


2,400,000
00 shares authorized
1,100,000
270,000
3,770,000
555,000
4,325,000

2014 Preference Ordinary Total


Regular dividends:
Preference 200,000
Ordinary 100,000 300,000
Balance - 1,400,000
Preference - 2M/3M 933,333
Ordinary - 1M/3M 466,667 1,400,000
1,133,333 566,667 1,700,000

Dividend per share


PSC OSC
1,133,333/20,000 = 56.67 566,667/50,000 = 11.33

2014 Preference Ordinary


Dividend for the year 200,000
Balance - to OSC 1,500,000
200,000 1,500,000

Dividend per share


PSC OSC
200,000/20,000 = 10 1,500,000/50,000 = 30

2014 Preference Ordinary Total


Dividend for the year 80,000 40,000 120,000
Balance - 1,580,000
Preference - 1M/1.5M 1,053,333
Ordinary - 500k/1.5M 526,667 1,580,000
1,133,333 566,667 1,700,000

Dividend per share


PSC OSC
1,133,333/10,000 = 113.33 566,667/10,000 = 56.67

Total 2014 Preference Ordinary


Regular dividends:
Preference 80,000
120,000 Ordinary 40,000
Balance - 1,580,000
Preference - Maximum of 50,000 50,000
630,000 Ordinary 1,530,000
750,000 130,000 1,570,000

Dividend per share


PSC OSC
130,000/10,000 = 13 1,570,000/10,000 = 157

Preference Ordinary Total

48,000
48,000 72,000

42,000 63,000
90,000 183,000
Total
200,000
1,500,000
1,700,000

Total

120,000
1,580,000
1,700,000

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