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7002 - Book Value and Preference Dividend

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Laika Zien Macadangdang
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69 views2 pages

7002 - Book Value and Preference Dividend

Uploaded by

Laika Zien Macadangdang
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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CPA REVIEW SCHOOL FOF THE PHILIPPINES

Manila
FINANCIAL ACCOUNTING AND REPORTING VALIX/VALIX/ESCALA/SANTOS/DELA CRUZ
BOOK VALUE AND PREFERENCE DIVDEND
1. An entity provided the following equity balances at year-end:
10% cumulative preference share capital, 30,000 shares, par P100 3,000,000
Ordinary share capital, 50,000 shares, par P100 5,000,000
Share premium 1,000,000
Retained earnings 2,000,000
Retained earnings appropriated 1,500,000
Revaluation surplus 500,000
The preference shares have a call price of 120, a liquidation price of 115 and dividends have not been
paid for 5 years. What is the book value per preference share and per ordinary share, respectively?
a. 165 and 161
b. 170 and 158
c. 150 and 170
d. 161 and 165
2. An entity provided the following data at year-end:
Preference share capital, 10% cumulative and participating, P100 par,
30,000 shares, dividends are in arrears for 5 years 3,000,000
Ordinary share capital, P100 par, 40,000 shares 4,000,000
Subscribed ordinary share capital, 20,000 shares 2,000,000
Subscription receivable 500,000
Share premium 3,000,000
Retained earnings 4,800,000
Treasury ordinary shares, 10,000 shares at cost 800,000
What is the book value per preference share and per ordinary share, respectively?
a. 185 and 225
b. 225 and 185
c. 150 and 230
d. 250 and 170
3. An entity provided the following data at year-end:
12% preference share capital, 20,000 shares, P100 par value 2,000,000
14% preference share capital, 10,000 shares, P300 par value 3,000,000
Ordinary share capital, 50,000 shares, P100 par value 5,000,000
Retained earnings 4,240,000
Share premium 1,500,000
The 12% preference share is cumulative and participating. The 14% preference share is noncumulative
and participating. Dividends are in arrears for 3 years.
1. What is the book value per 12% preference share?
a. 156
b. 176
c. 136
d. 100
2. What is the book value per 14% preference share?
a. 402
b. 462
c. 342
d. 300
3. What is the book value per ordinary share?
a. 132
b. 152
c. 100
d. 112

7002
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4. An entity provided the following shareholders’ equity on December 31, 2022:


Ordinary share capital, P10 par, 5,000,000 shares 50,000,000
Preference share capital, P100 par, 5% cumulative, 1,000,000 shares 100,000,000
There were no changes in share capital outstanding since the first year of operations in 2020. The entity
paid cash dividends of P3,000,000 in 2020, P4,000,000 in 2021 and P12,000,000 in 2022.
1. What amount should be received as cash dividends by preference shareholders in 2022?
a. 8,000,000
b. 5,000,000
c. 3,000,000
d. 4,000,000
2. What amount should be received as cash dividends by ordinary shareholders in 2022?
a. 7,000,000
b. 4,000,000
c. 5,000,000
d. 6,000,000
5. An entity began operations on January 1, 2018 and has never paid cash or share dividend. The capital
accounts have not changed since inception of operations. On December 31, 2022, the entity revealed the
following capital accounts:
Preference share capital, P100 par, 12% participating and cumulative,
100,000 shares 10,000,000
Preference share capital, P100 par, 10% nonparticipating, noncumulative,
70,000 shares 7,000,000
Ordinary share capital, P10 par, 1,500,000 shares 15,000,000
The entity reported in 2018 P1,500,000 loss, 2019 P1,300,000 loss, 2020 P1,200,000 loss, 2021
P4,500,000 income and 2022 P9,000,000 income. If the maximum amount available for cash dividend is
declared on December 31, 2022, what amount should be reported as dividend payable to the shareholders?
1. 12% Preference shareholders
a. 6,000,000
b. 6,400,000
c. 6,520,000
d. 6,500,000
2. 10% Preference shareholders
a. 3,500,000
b. 1,400,000
c. 700,000
d. 840,000
3. Ordinary shareholders
a. 2,400,000
b. 1,800,000
c. 2,280,000
d. 2,800,000

E n d

7002

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