The Company has the same capital structure (except for retained earnings) for the past five year, see details below:

6% Preference Share Capital, 80,000 shares issued and outstanding, P 50 par P4,000,000

Ordinary Share Capital, 200,000 shares issued and outstanding, P30par 6,000,000

Retained Earnings 5,000,000

No dividends were paid prior to 2020 for two years. On December10, 2020, the Company declared P 1,500,000 as cash dividends to shareholders of record of December 21, 2020, payable on January 5,2021.

Requirements:

1. Prepare all the necessary journal entries to record the dividend transactions.
2. Allocate the dividends between ordinary shareholders and preference shareholders if:

Case A. Preference share capital is NON-CUMULATIVE and NON-PARTICIPATING

Case B. Preference share capital is CUMULATIVE and NON-PARTICIPATING

Case C. Preference share capital is NON-CUMULATIVE and FULLYPARTICIPATING

Case D. Preference share capital is NON-CUMULATIVE and PARTICIPATING UP TO ADDITIONAL 5%

3. Assuming the dividend declared is P 1,000,000 what will be the allocation of dividends if in case the preference share is CUMULATIVE and FULLY PARTICIPATING

Answer rating: 100% (QA)

Solution P 4000000 200000x P20 P 6000000 6 psc 80000 XP50 ESC R... View the full answer