Activities - Corporation Activities - Corporation

Problem 1: The adjusted Trial Balance of STU Corp. on December 31, 2017 includes the following account balances: Problem 1: The adjusted Trial Balance of STU Corp. on December 31, 2017 includes the following account balances:
Dividends Payable 80,000 Dividends Payable 80,000
Income Tax Payable 50,000 Income Tax Payable 50,000
Ordinary Share Capital (500,000 shares authorized) 1,500,000 Ordinary Share Capital (500,000 shares authorized) 1,500,000
Ordinary Shares Subscribed (10,000 shares) 50,000 Ordinary Shares Subscribed (10,000 shares) 50,000
Ordinary Share Premium 100,000 Ordinary Share Premium 100,000
10% Preference Share Capital (25,000 shares authorized, 12,000 shares outstanding 600,000 10% Preference Share Capital (25,000 shares authorized, 12,000 shares outstanding 600,000
Preference Share Premium 60,000 Preference Share Premium 60,000
Retained Earnings Appropriated for Contingencies 250,000 Retained Earnings Appropriated for Contingencies 250,000
Retained Earnings Appropriated for Bond Retirement 300,000 Retained Earnings Appropriated for Bond Retirement 300,000
Retained Earnings Unappropriated 400,000 Retained Earnings Unappropriated 400,000
Building 800,000 Building 800,000
Ordinary Share Capital Distributable 175,000 Ordinary Share Capital Distributable 175,000
Paid-in Capital from Share Dividend 65,000 Paid-in Capital from Share Dividend 65,000
Instructions: From the forgoing information, prepare the shareholders’ equity section as it would appear on the statement Instructions: From the forgoing information, prepare the shareholders’ equity section as it would appear on the statement
of financial position. of financial position.

Problem 2: The STU Corporation, has paid dividends as follows: 2015 – P2,500,000; 2016 – P3,500,000; 2017 – P6,500,000.
During the last three years, the company has the following outstanding share capital: 100,000 shares of P100 par, 12%
preference share capital and 500,000 shares of P10 par ordinary share capital. Dividends are in arrears of two years at the
beginning of 2015.
Instructions: Calculate the amount of dividend that will be paid per share and in total on preference shares and ordinary
shares for each year under each of the following independent assumption for preference shares: 1) Noncumulative and
nonparticipating 2) cumulative but not participating 3) Noncumulative but fully participating 4) cumulative and fully participating
and 5) Noncumulative but participating up to an additional 8%.
Problem 2: The STU Corporation, has paid dividends as follows: 2015 – P2,500,000; 2016 – P3,500,000; 2017 – P6,500,000.
During the last three years, the company has the following outstanding share capital: 100,000 shares of P100 par, 12%
preference share capital and 500,000 shares of P10 par ordinary share capital. Dividends are in arrears of two years at the
beginning of 2015.
Instructions: Calculate the amount of dividend that will be paid per share and in total on preference shares and ordinary
shares for each year under each of the following independent assumption for preference shares: 1) Noncumulative and
nonparticipating 2) cumulative but not participating 3) Noncumulative but fully participating 4) cumulative and fully participating
and 5) Noncumulative but participating up to an additional 8%.

Problem 3: STU Corporation has two classes of share capital outstanding: 10%, P50par preference share capital and P10 par Problem 3: STU Corporation has two classes of share capital outstanding: 10%, P50par preference share capital and P10 par
ordinary share capital. At December 31, 2017, the following accounts were included in the shareholders’ equity: ordinary share capital. At December 31, 2017, the following accounts were included in the shareholders’ equity:
Preference Share Capital, 100,000 shares P 5,000,000 Preference Share Capital, 100,000 shares P 5,000,000
Ordinary Share Capital, 1,000,000 shares 10,000,000 Ordinary Share Capital, 1,000,000 shares 10,000,000
Preference Share Premium 1,000,000 Preference Share Premium 1,000,000
Ordinary Share Premium 5,000,000 Ordinary Share Premium 5,000,000
Retained Earnings 4,500,000 Retained Earnings 4,500,000
The following transactions have affected the shareholders’ equity of the company during the year 2018: The following transactions have affected the shareholders’ equity of the company during the year 2018:
Jan 1 Issued 15,000 preference shares at P60 per share. Jan 1 Issued 15,000 preference shares at P60 per share.
Feb 1 Issued 25,000 ordinary shares at P25 per share. Feb 1 Issued 25,000 ordinary shares at P25 per share.
Mar 1 Issued to ordinary shareholders of record share rights to purchase at P20 one additional share for every 5 shares Mar 1 Issued to ordinary shareholders of record share rights to purchase at P20 one additional share for every 5 shares
held. held.
Apr 1 80% of the share rights were exercise and the related shares were issued. The remaining 20% were expired and Apr 1 80% of the share rights were exercise and the related shares were issued. The remaining 20% were expired and
the related shares were offered to public auction and the same were sold at their fair value of P25 per share. the related shares were offered to public auction and the same were sold at their fair value of P25 per share.
Jun 1 Issued additional ordinary shares in a 2-for-1 share split. Jun 1 Issued additional ordinary shares in a 2-for-1 share split.
Jul 1 Reacquired 20,000 ordinary shares at P14 per share. Jul 1 Reacquired 20,000 ordinary shares at P14 per share.
Oct 31 Reissued 15,000 treasury shares at P16 per share. Oct 31 Reissued 15,000 treasury shares at P16 per share.
Dec 31 Profit for the year is P2,500,000 and declared regular dividend to preference share an P1.25 dividend per share on Dec 31 Profit for the year is P2,500,000 and declared regular dividend to preference share an P1.25 dividend per share on
ordinary shares. ordinary shares.
Instructions: Prepare the journal entries related to the above transactions and the shareholders’ equity section of the Instructions: Prepare the journal entries related to the above transactions and the shareholders’ equity section of the
statement of financial position of STU Corporation at December 31, 2018. statement of financial position of STU Corporation at December 31, 2018.