Corporation: Dividends

E-1 Assume the Board of Directors of ABC Corporation, at its meeting on January 20,2018 declared
dividends under the following scenarios:

a) Declared cash dividend of P 1.50 per share, payable March 21,2018, to shareholders of record
on March 1, 2018. There were 10,000 ordinary shares outstanding.

b) Declared property dividend of one share of XYZ Company ordinary share for every five shares of
ABC Corporation ordinary share. XYZ Company shares are held by ABC Corporation as equity
investments at fair value through profit or loss and have a carrying value (which equals the
market value) per share of P 50. It was agreed that date of distribution would be on February 28,
2019.On December 31, 2018, the market value of the equity investments for distribution was P
110,000 and P 110,000 on February 28, 2019.There were 10,000 ordinary shares outstanding.

c) Declared several pieces of equipment with cost of P 240,000 on November 1. The balance of
accumulated depreciation pertaining to these assets on January 1, 2018 was P 96,000. The
company depreciates its equipment at 10% per annum. The equipment had a fair value of P
160,000 on November 1,2018 and P 164,000 on December 31, 2018. On the date of distribution,
which was January 31,2019, the assets had a total fair value of P 165,000.

d) Declared a 15% bonus issue on ordinary shares outstanding of 100,000 with par value of P 10,
distributable on March 31, 2018 to shareholders of record as of March 1,2018. The market value
of each share on February 1 is P 15.

e) Declared a 25% bonus issue on ordinary shares outstanding of 100,000 with par value of P 10,
distributable on February 28, 2018 to shareholders. The market value of each share on February
1 is P 15.

f) Declared 8% scrip dividends on April 1, 2018 payable on April 1 ,2019 with interest the rate of
12%. The total par value of the outstanding shares of ABC Corporation is P 1,000,000.

Required: compute and journalize the dividends to be distriuted.

E-2 Assume the following information for ABC Corporation at December 31, 2018:

12% Preference share, P 100 par, 10,000 shares issued and outstanding P 1,000,000

Ordinary share, P 50 par, 40,000 shares issued and outstanding 2,000,000

The ABC Corporation declared and paid cash dividends for the years 2018 through 2020 as
follows:

2018 P 100,000

2019 400,000

2020 600,000

ABC’s share capital balances remained unchanged for years 2018 through 2020.
Required: Determine the total dividends and dividends per share for both the preference and ordinary
share for each of the three years, under the following independent assumptions:

a) Preference share is non-cumulative and non-participating

b) Preference share is cumulative and non-participating. At the beginning of 2018, undeclared

dividends on the preference share is P 90,000.

c) Preference share is cumulative and fully participating. There are no undeclared dividends at the
beginning of the 2018.

d) Preference is non-cumulative and participating up to an additional 5%.

E-3 The shareholder’s equity section of Lucky corporation on December 31,2012 are as follows:

10% preference share capital, 5,000 shares, P 50 par P 250,000

Ordinary share, P 100 par 500,000

Additional paid in capital 100,000

Retained earnings 200,000

Cash dividends were declared on this date. Dividends were last declared on December 31,2010.

Required: Determine the total dividends and dividends per share for both the preference and ordinary
share for each of the three years, under the following independent assumptions:

a) Preference share is cumulative and participating and the amount of dividend declared is P
130,000.

b) Preference share is non-cumulative and participating and the amount of dividend declared is P
60,000.

c) Preference share is non-cumulative and participating and the amount of dividend declared is P
35,000.

d) Preference is cumulative and participating and the amount of dividend declared is P 60,000.