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Chapter 7 - Problem SOlving

The document discusses entries related to share dividends for a health insurance corporation. It provides journal entries to record: 1) the declaration of a 4% share dividend out of retained earnings, distributing shares and transferring funds to share premium and share distributable accounts and 2) the issuance of shares to shareholders from the share distributable account. It also shows the corporation's share capital, retained earnings, and total shareholders' equity accounts before and after the share dividend declaration, noting an increase in share capital and share premium offset by a decrease in retained earnings.

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395 views3 pages

Chapter 7 - Problem SOlving

The document discusses entries related to share dividends for a health insurance corporation. It provides journal entries to record: 1) the declaration of a 4% share dividend out of retained earnings, distributing shares and transferring funds to share premium and share distributable accounts and 2) the issuance of shares to shareholders from the share distributable account. It also shows the corporation's share capital, retained earnings, and total shareholders' equity accounts before and after the share dividend declaration, noting an increase in share capital and share premium offset by a decrease in retained earnings.

Uploaded by

Desirre Transona
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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PROBLEM # 9

Entries for Share Dividends

E. Tan Med-Care Inc. is a health insurance corporation. The following account balances appear on the statement of financi
:Ordinary Shares (50,000 shares authorized), P10 par, P400,000; Share Premium-Ordinary, P42,500; and Retained Earning

Reuired:
1. Journalize the entries to record

A. the declaration of the dividend.


Retained Earnings 240,000
Share Distributable 160,000
Share Premium-Ordinary 80,000
To record declaration of 4% share dividends.

B. the issuance of the shares.


Share Distributable 160,000
Ordinary Shares 160,000
To record issuance of share dividends.

2. Determine the following amounts before the share dividend was declared:

A. total share capital


B. total retained earnings
C. total shareholders' equity
Before Dividends
Ordinary Shares, P10 par, 400,000 4,000,000
Share Premium-Ordinary 42,500
Total Share Capital 4,042,500
Retained Earnings 299,500
Total Shareholders' Equity 4,342,000

3. Determine the following amounts after the share dividend was declared:

A. total share capital


B. total retained earnings
C. total shareholders' equity
After Dividends Increase (Decrease)
Ordinary Shares, P10 par, 400,000 4,160,000 160,000
Share Premium-Ordinary 122,500 80,000
Total Share Capital 4,282,500 240,000
Retained Earnings 59,500 (240,000)
Total Shareholders' Equity 4,342,000
,500; and Retained Earnings, P299,500. The board of directors declared a 4% share dividend when the market price of the stock was P1
arket price of the stock was P15 a share.

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