EFFECTS OF TRANSACTIONS

Assets

1 Declaration of cash dividends 0

2 Payment of cash dividends -

3 Declarations of share dividends 0

4 Issuance of share dividends

0

5 Cash Purchase of treasury stock -

6 Sale of treasury stock below cost +

* there is a decrease in share capital if there is an existing share premium treasury

** the difference between the cost of treasury stock and the issued price of treasury shares is

*** there is no effect because of the ff. entry

Share Distributable
 Retained
Liabilities Share Capital Earnings

+ 0 -
- 0 0
0 + -

0 0*** 0

0 0 0 decrease in Equity
0 -* -**

isting share premium treasury

and the issued price of treasury shares is charged to retained earnings

hare Distributable xx

Ordinary Shares xx
PROBLEM 9: ENTRIES FOR CASH DIVIDENDS
DATE ACCOUNT TITLES & EXPLANATIONS

DATE OF DECLARATION
Jan 2 Retained Earnings

DATE OF RECORD
Jan 22 No journal entry

DATE OF PAYMENT
Feb 1 Cash Dividends Payable
M 9: ENTRIES FOR CASH DIVIDENDS
ACCOUNT TITLES & EXPLANATIONS P.R. DEBIT CREDIT
DECLARATION
Retained Earnings 35,000
Cash Dividends Payable 35,000
To record declaration of cash dividends
RECORD
No journal entry

PAYMENT
Cash Dividends Payable 35,000
Cash 35,000
To record issuance of cash dividends
DATE ACCOUNT TITLES & EXPLANATIONS P.R. DEBIT

1 Retained Earnings 1,000,000

Share Distributable

Share Distributable 1,000,000

Ordinary Share

2 Retained Earnings 750,000

Share Distributable
Share Premium

Share Distributable 500,000

Ordinary Share
CREDIT

Outstanding Shares = Issued Shares + Subscribed Shares - Treasury Shares

1,000,000 Outstanding Shares = 50,000 + 0 - 0 = 50,000 shares

No. of Share Dividends = 50,000 * 20% = 10,000

Retained Earning = 10,000 * 100 par = 1,000,000

1,000,000

No. of Share Dividends = 50,000 * 10% = 5,000

500,000 Retained Earnings = 5,000 * 150 = 750,000

250,000 Share Distributable = 5,000 * 100 = 500,000

500,000
asury Shares
DATE ACCOUNT TITLES & E
2019
June 7 Share Dividends

Solution:

Retained Earnings = OS cost/pa

Retained Earnings = P50 x

Share Distributable = Issued Sh

Share Distributable = 80,00

Share Premuim= Retained Earn

Share Premuim = 960,000 -

28 Share Distributable
Dec 5 Cash Dividends

26 Cash Dividends Payable

31 Income Summary

31 Retained Earnings
 ACCOUNT TITLES & EXPLANATIONS P.R. DEBIT CREDIT

Share Dividends 960,000

Share Distributable 400,000
Share Premuim 560,000
To record declaration of 10% share dividends

Solution:

Retained Earnings = OS cost/par x Issued Shares x Share Dividend

Retained Earnings = P50 x 80,000 x 10% 960,000

Share Distributable = Issued Shares x Share Dividend x Market Value

Share Distributable = 80,000 x 10% x P120 400,000

Share Premuim= Retained Earnings - Share Distributable

Share Premuim = 960,000 - 400,000 560,000

Share Distributable 400,00

 Ordinary Shares 400,000
Insuance of share dividends

Cash Dividends 880,000

Cash Dividends Payable 880,000
To record declaration of cash dividends

Cash Dividends Payable 880,000

Cash 880,000
Paid cash dividends

Income Summary 2,380,000

Retained Earnings 2,380,000
To close profit account

Retained Earnings 1,840,000

Share Dividends 960,000
Cash Dividends 880,000
To close dividends account
Retained Earnings
Balance, 1/1/2019 as previously reported

Additional: Profit
Balance without deductions
Less: Cash Dividends Declared
Share Dividends Declared
Total Retained Earnings, 12/31/19
Beg. Ordinary Shares 80,000
Add: 10% share dividend 8,000
Total Outstanding Shares 88,000
x P10 cash dividends /share 10
Total Cash Dividends 880,000

Given
Given
 2,850,000

2,380,000
5,230,000
800,000
960,000 1,760,000
3,470,000
DATE ACCOUNT TITLES & EXPLA

2018

Jan 8 Cash

SOLUTION

Mar 12 Cash
 SOLUTION

Jun 30 Share Dividends

SOLUTION
July 10 Shares Distributable

Oct 7 Treasury Shares

SOLUTION

Dec 18 Cash Dividends

SOLUTION

31 Income Summary

31 Retained Earnings
ACCOUNT TITLES & EXPLANATIONS P.R. DEBIT CREDIT

260,000

Ordinary Shares 100,000

Share Premium 160,000

Issued Ordinary Shares above par

Cash = 10,000 issued shares x 26 cash per share

Ordinary Shares= 10,000 issued shares x 10 par

108,000

Treasury Shares 100,000

Share Premium-Treasury 8,000

Sold Treasury shares above cost

 cash= 4,000 x 27 cash per share

100,000 / 4,000 = 25

treasury shares: 25 x 4,000= 100,000

Share Dividends 63,000

Shares Distributable 21,000

Share Premium 42,000

To record the declaration of 6% share dividends

Issued + Subscribed - Treasury = Outstanding

outstanding shares 2017: 25,000 + 0 - 4,000 = 21,000

Issued shares 2018: 25,000 + 10,000 = 35,000

Outstanding shares 2018: 35,000 + 0 - 0 = 35,000

35,000 x 6% = 2,100
 2,100 x 30 = 63,000 retained earnings

2,100 x 10 = 21,000 share distributable

Shares Distributable 21,000

Ordinary Shares 21,000

Issuance of Share dividends

Treasury Shares 30,800

Cash 30,800

Acquired Ordinary shares for Treasury

1,100 x 28 cash per share

Cash Dividends 72,000

 Cash Dividends Payable 72,000

To record declaration of cash dividends

Issued + Subscribed - Treasury = Outstanding

35,000 + 2,100 - 1,100 = 36,000

36,000 x 2 cost per share cash dividend = 72,000

Income Summary 183,000 Given

Retained Earnings 183,000 Given

To close income summary to retained earnings

Retained Earnings 135,000

Share Dividends 63,000 Jun 30

Cash Dividends 72,000 December 18

To close dividends to retained earnings
 L GENERALES CORPORATION

STATEMENT OF CHANGES IN SHAREHOLDER'S EQU

Dec 31, 2018

Ordinary Shares Share Premium Share Premium-

P100 par Treasury

Balance Jan 1 250,000 325,000 12,000

Profit

Cash Dividend- Ordinary

Share Dividend 6% 21,000 42,000

Issued Ordinary Shares 100,000 160,000

Purchase of Treasury Shares

Issue of Treasury Shares 8,000

Balance Dec 31 371,000 527,000 20,000

Ordinary Shares

Share Premium

Share Premium- Treasury

Total Share Capital

Retained Earnings

Total

Less: Treasury Stock, 1,100 shares P28 at cost

Total Shareholders' Equity

ES CORPORATION

ES IN SHAREHOLDER'S EQUITY

c 31, 2018

Retained Earnings Treasury Shares Total

198,000 -100,000 685,000

183,000 183,000

-72,000 -72,000

-63,000 -

260,000

-30,800 -30,800

100,000 108,000

246,000 -30,800 1,133,200

371,000

527,000 898,000

20,000

918,000

250,200

1,168,200

30,800

1,137,400