1.On December 31, 2012, the shareholders’ equity of Aganon Inc. was as follows: Ordinary Shares, par value P100, authorized 30,000 shares, issued and outstanding 9,000 shares P900,000 Share Premium 1,160,000 Retained Earnings 1,460,000 Total Shareholders’ Equity P3,520,000 On March 21, 2013, Aganon declared a 20% share dividend. Accordingly, 1,800 shares were issued when the fair market value was P160 per share. For the three months ended March 31,2013, Aganon sustained a net loss of P320,000. On March 21, 2013 Retained Earnings was capitalized at a.P108,000 b. P468,000 c. P288,000 d. P180,000
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
1.On December 31, 2012, the shareholders’ equity of Aganon Inc. was as follows:
|
Ordinary Shares, par value P100, authorized 30,000 shares, issued and outstanding 9,000 shares |
P900,000 |
|
Share Premium |
1,160,000 |
|
Retained Earnings |
1,460,000 |
|
Total Shareholders’ Equity |
P3,520,000 |
On March 21, 2013, Aganon declared a 20% share dividend. Accordingly, 1,800 shares were issued when the fair market value was P160 per share. For the three months ended March 31,2013, Aganon sustained a net loss of P320,000.
On March 21, 2013 Retained Earnings was capitalized at
a.P108,000
b. P468,000
2.) The JJJ Corporation has the following classes of Share Capital outstanding as of December 31, 2008:
Ordinary Shares, P20 par value, 20,000 shares outstanding
10%
1,000 shares outstanding
No dividends were declared on 2006 and 2007. On December 31, 2008, a total cash dividend of P200,000 was declared.
How much dividends will be received by the ordinary shareholders?
a.P160,000
3.) At December 31, 2009, VV Corporation had outstanding 2,000 shares of P1,000 par value, 6% cumulative preference shares and 10,000 shares of P100,000 par value ordinary shares. At December 31, 2009 dividends in arrears on the preference shares were P60,000. Cash dividends declared in 2009 totaled P220,000.
What was the amount of dividends payable to VV’s ordinary shareholders?
Ordinary Shares, P20 par value, 20,000 shares outstanding
6% Preference Shares, P100 par value, cumulative, non-participating, 2,000 shares outstanding
No dividends were declared on 2006 and 2007. On December 31, 2008, a total cash dividend of P200,000 was declared.
How much dividends will be received by the ordinary shareholders?
a.P164,000
8.)On December 31, 2012, the shareholders’ equity of Aganon Inc. was as follows:
|
Ordinary Shares, par value P100, authorized 30,000 shares, issued and outstanding 9,000 shares |
P900,000 |
|
Share Premium |
1,160,000 |
|
Retained Earnings |
1,460,000 |
|
Total Shareholders’ Equity |
P3,520,000 |
On March 21, 2013, Aganon declared a 20% share dividend. Accordingly, 1,800 shares were issued when the fair market value was P160 per share. For the three months ended March 31,2013, Aganon sustained a net loss of P320,000.
The balance of Aganon’s Retained Earnings account as of March 31, 2013 should be
a.P1,600,000
5.)The Shareholders’ Equity of Metro Cebu Central Chemicals Inc. on December 31, 2020 appeared as follows:
|
Ordinary Shares, authorized 30,000 shares, par value P100, issued 10,000 shares of which 2,000 shares are in the treasury |
P1,000,000 |
|
|
Share Premium |
|
320,000 |
|
|
|
|
|
Appropriated for Treasury Shares |
P200,000 |
|
|
Free or Unrestricted |
600,000 |
800,000 |
|
Total |
|
P2,120,000 |
|
Less: Cost of Treasury Shares |
|
200,000 |
|
Total Shareholders’ Equity |
|
P1,920,000 |
How much Accumulated Profits & Losses is available for dividend declaration?
6.) Encore Industries owned investment securities with a carrying amount of P45 million on August 12 to be distributed on Sept. 12. At that time, Encore's board of directors declared a property dividend consisting of these securities. The fair value of the securities on August 12 is P58 million
What amount of gain should Encore recognize in earnings in connection with this property dividend
a.P-0-
c.P17 million
d.P15 million
7.) At December 31, 2009, VV Corporation had outstanding 2,000 shares of P1,000 par value, 6% cumulative preference shares and 10,000 shares of P100,000 par value ordinary shares. At December 31, 2009 dividends in arrears on the preference shares were P60,000. Cash dividends declared in 2009 totaled P220,000.
What was the amount of dividends payable to VV’s preference shareholders?
8.) The JJJ Corporation has the following classes of Share Capital outstanding as of December 31, 2008:
Ordinary Shares, P20 par value, 20,000 shares outstanding
6% Preference Shares, P100 par value, cumulative, non-participating, 2,000 shares outstanding
No dividends were declared on 2006 and 2007. On December 31, 2008, a total cash dividend of P200,000 was declared.
If you own 5,000 ordinary shares and 500 preference shares, how much cash will you receive when the dividends are paid?
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