NAME: SCORE: SECTION: PROFESSOR: Problem #10 Share Dividends and Share Splits On Jan. 1, 2019, the records of Matuguinas Corporation showed the following balances: Ordinary Shares, P1 par Share Premium-Ordinary Retained Earnings P 80,000 920,000 760,000 On Jan. 15, 2019, the board of directors declared a 3% share dividend; the stock's market price was P50 per share. On Nov. 4, 2019, the board of directors declared a 2- for-1 share split; the stock's market price was P90 per share. Required: 1. How many shares of stock were outstanding on Jan. 1, Mar. 31, and Dec. 31, 2019 assuming no other events related to shareholders' equity occurred? 2. What effect did the share dividends have on total shareholders' equity? 3. Prepare the entries for these two events. 4. Why would a corporation declare a share split? 5. What would the second entry have been if the corporation had declared a 100% share dividend instead of a 2-for-1 share split?
NAME: SCORE: SECTION: PROFESSOR: Problem #10 Share Dividends and Share Splits On Jan. 1, 2019, the records of Matuguinas Corporation showed the following balances: Ordinary Shares, P1 par Share Premium-Ordinary Retained Earnings P 80,000 920,000 760,000 On Jan. 15, 2019, the board of directors declared a 3% share dividend; the stock's market price was P50 per share. On Nov. 4, 2019, the board of directors declared a 2- for-1 share split; the stock's market price was P90 per share. Required: 1. How many shares of stock were outstanding on Jan. 1, Mar. 31, and Dec. 31, 2019 assuming no other events related to shareholders' equity occurred? 2. What effect did the share dividends have on total shareholders' equity? 3. Prepare the entries for these two events. 4. Why would a corporation declare a share split? 5. What would the second entry have been if the corporation had declared a 100% share dividend instead of a 2-for-1 share split?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Partnership Accounting
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings, admission of a new partner, etc.
Partner Admission and Withdrawal
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings of a partner, etc.
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Transcribed Image Text:NAME:
SCORE:
SECTION:
PROFESSOR:
Problem #10
Share Dividends and Share Splits
On Jan. 1, 2019, the records of Matuguinas Corporation showed the following balances:
P 80,000
Ordinary Shares, P1 par
Share Premium-Ordinary
Retained Earnings
920,000
760,000
On Jan. 15, 2019, the board of directors declared a 3% share dividend; the stock's
market price was P50 per share. On Nov. 4, 2019, the board of directors declared a 2-
for-1 share split; the stock's market price was P90 per share.
Required:
1. How many shares of stock were outstanding on Jan. 1, Mar. 31, and Dec. 31, 2019
assuming no other events related to shareholders' equity occurred?
2. What effect did the share dividends have on total shareholders' equity?
3. Prepare the entries for these two events.
4. Why would a corporation declare a share split?
5. What would the second entry have been if the corporation had declared a 100%
share dividend instead of a 2-for-1 share split?
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