[pnoressom True or False i 10. 11. 12. 13. Share dividends increase the proportionate interests of the shareholders Because of the increase in their shareholdings. For most companies, the amount ‘and timing of dividend declarations arg determined by the shareholders at their annual meeting. Retained earnings consist of a pool of funds to be distributed to shareholders, A liquidating dividend is usually paid when a corporation is going out of business or reducing its operations. Dividends are contractual obligations of the corporation which must be paid at regular intervals. In case of liquidation, the claims of the preference shareholders are given preference over the claims of creditors. Retained earnings represent cash readily available fgr dividends. Dividends in arrears refer to passed preference dividends which must be satisfied before any dividends may be paid on ordinary shares. In most cases, corporations pay out dividends equal to profit unless specific restrictions, either legal or financial, are stated in the annual report. The date on a statement of changes in shareholders’ equity is for a period of time rather than for a specific point in time. Cash dividends are declared by the board of directors with the concurrence of the shareholders of the corporation. Dividends are expenses since they decrease shareholders’ equity. Liquidating dividends are paid when a corporation is permanently reducing its size or going out of business. 7-20 | WIN Ballada’s Partnership and Corporation Accountingit 8 2. a 2. B. share dividend wit, cau is declared. He "Increase in total share capital at the date the dividend a share Split, the pay ; proportion to the Adaltional sh, Of all shares in the issued class is increased in mmulative preferenc, paca ned dividends a ares entitle the holder to receive all current and Previously w “the ordinary share dividends are distributed, erson Owning stock Rea fastlated On the date of record will receive share dividends that have Retained earnings Fepresey ni ‘1 paicaied hao eee cash Benerated from profitable operations that have ess, Apossible reason to restrict retai ined earnings would be to reserve a certain amount for dividends on ordinary shares, Dividends on cumulative preference shares do not become a liability of the corporation until they are declared by the board of directors, Chapter 7: Retained Earnings | 7-21| True or False 1. The purchase of treasury stock does not affect shareholders’ equity. x A dividend that represents a return to the shareholders of a part of ther sh capital rather than a distribution out of retained earnings is called a liquidating dividend. 3. A debit balance in the Retained Earnings account is referred to as a deficit. 4. A share dividend will cause an increase in the total number of shares issued any outstanding. 5. Correction of errors and prior period adjustments both result in either a debit or 5 credit to Retained Earnings. 6. Dividends in arrears are liabilities of the corporation. 7. Ashare dividend does not affect the total amount of shareholders’ equity. 8. No entry is required on the date of record for a cash dividend. 9. Property dividends are charged to retained earnings at cost or book value of the non-cash assets distributed. 10. Ashare dividend is a pro rata distribution of cash to a corporation's shareholders, 11. A 2-for-I share split will have the same effect on the number of shares outstanding as a 200% share dividend. 12. Dividends usually cannot be paid on ordinary shares unless the regular dividend has been paid to preference shareholders. 13. Ashare split normally increases total shareholders’ equity. 14, Cumulative:preference shares entitle the holders to participate with the holders of ordinary shares pro-rata in the remainder after the ordinary shareholders have received their initial share. 7-22 | WIN Ballada’s Partnership and Corporation Accounting0 2. 2 B 4. + garnings to share capital, ivi s liabilities at ete pac dividend causes an increase in a corporation’ : share dividend reduce, S the retaj bE rmanently capitalizes Ae reduced Portion of © Fetained earnings balance and pet the Tetained earnings, - a share sr TESUIS in a transfer ofthe market value ofthe share from retained retained earnings appro Pato I shareholder's equity shown on the statement of financiaj Nn reduces the total Position, share splits ane share dividends are accounted for differently. prior period adjustments are the prior periods. These recognized income and expe, Corrections of errors made in financial statements of hould be shown in the current year's statement of nse, pividends are declared by the shareholders, cash Dividends Payable is closed to Retained Earnings at the end of the period. The retained earnings balance of a corporation is part of its share capital. Ashare dividend exceeding 25% is properly treated as a share split. Retained earnings is a component of contributed capital. Chapter 7: Retained Earnings | 7-23[scone = Multiple Choice x BON Which of the following might appear as an item in a statement of changes in equity» 1. Gain on disposal of properties Appropriation for treasury stocks : Equity dividends proposed after the reporting date Issue of share capital 1,3 and 4 only 2and 4 only Land 2 only 3and 4 only poop The following items required consideration in preparing the financial statements: © On Jan. 1, 2019, the corporation made a loan of P120,000 to an employee, payable on Apr. 30, 2020 with an interest of 2% per annum. On due date, she’s expected to pay the loan and the total interest. The corporation paid P90,000 for insurance in 2019 covering the year ending ‘Aug. 31, 2020. ‘* On.Jan. 2, 2020, the corporation received rent from a tenant P40,000 covering the six months to Dec. 31, 2019. ‘What is the total amount to be included in the statement of financial position as at Dec. 31, 2019? Receivables and Prepayments Payables and Accruals a 220,000 P 2,400 b. P222,400 zero cH 102,400 zero d. P162,400 P60,000 Which of the following statements about financial statements are correct? 1. In preparing a statement of cash flows, either the direct or the indirect method may be used. Both lead to the same figure for net cash from operating activities. 2. Loan notes can be classified as current or non-current liabilities. 3. Financial statements must disclose a corporation's total expense for depreciation, if material. 4. Acorporation must disclose by a note the details of all adjusting events effected in the financial statements. 7-24 | WIN Ballada’s Partnership and Corporation Accounting4,2.and 3 only zand 4 only 3 and 4 only ail four items the followi ; wie 'B May appear as separate items in a statement of changes in eal pividends on equity share 5 Loss eases of investments during the period proceeds of an issue of ordi » Sat eco 4,3and4 only & and 4 only > and only A All four items which ofthe following items could appear ina statement of cash flows? proceeds of issue of shares proposed dividends irrecoverable debts written off Dividends received 4,2and 3 only 4,2,3and 4 only and 4 only 2and 3 only In preparing the cash flows from operating activities section of a statement of cash flows (using the indirect method), which of the following statements are correct? 1, Loss on sale of operating non-current assets should be deducted from profit before tax. 2. Increase in inventory should be deducted from operating profits. 3. Increase in payables should be added to operating profits. Depreciation expense should be added to profit before tax. 1,2and3 1,2and4 1,3and4 2,3and 4 aeose Chapter 7: Retained Earnings | 7-257. In preparing a statement of cas! es calculation of cash flows from operating activities (using Depreciation Expense aye Gain on Sale of Non-Current Assets Atta Increase in Inventories jaan Decrease in Receivables ag O0e Increase in Payables , What will be the net effect of these items? ‘a. Addition to operating profit 890,000 b. . Subtraction from operating profit 890,000 . Addition to operating profit 1,070,000 990,000 d. Addition to operating profit 8. Part of a corporation's draft statement of cash flows is shown below: Profit before Tax 1,864,000 Depreciation Expense (216,000) Proceeds of Sale of Non-Current Assets 36,000 Increase in Inventory (33,000) 44,000 Increase in Accounts Payable The following criticisms of the above extract have been made: 1. Depreciation expense should have been added not deducted. 2. Increase in inventory should have been added not deducted. 3. Increase in accounts payable should have been deducted not added. h flows, the following figures are considered j, the indirect method); 4. Proceeds of sale of non-current assets should not appear in this section of the statement of cash flows. Which of these criticisms are valid? 2and 3 only Land 4 only Land 3 only 2and 4 only aoc of cash flows from financing activities? 1. Proceeds of sale of premises 2. Dividends received 3. . Bonus issue of shares 4. Settlement of notes payable 7-26 | WIN Ballada’s Partnership and Corporation Accounting In preparing a statement of cash flows, which of the following items could form parte ro tonly 2only 3only 4only in the preparation of the § understated by P300,000, yncorrected? nancial statements for 2020, the ending inventory was What will be the effect of this error if it remains The 2020's profit will be |. The 2020's profit will be The 2020's profit will be |, The 2020's profi Overstated and 2021's profit will be understated. Understated but there will be no effect on 2021's profit. M understated and 2021's profit will be overstated, twill be overstated but there will be no effect on 2021's profit. on July 1, 2020, E. Cristobal Corp, acquired a service vehicle for P200,000. It is to be depreciated on a straight line basis i reer 40,000 at the end off at 20% per year. The estimated salvage value is ae ve years. The corporation makes proportionate depreciation charges il year of purchase, The 200,000 cost was correctly credited but sted as a debit to the repairs account. How will the profit for the year ended Dec. 31, 2020 be affected by the error? Understated by P184,000 Understated by P168,000 Overstated by P184,000 Overstated by P200,000 Chapter 7: Retained Earnings | 7-27[score [proresson; [wane [secnon; SS PROFESSOR: Multiple Choice 1. The book value of ordinary shares is the same as par value. liquidation value. net worth. net tangible asset value per share. aos NMB Corporation has 5,000,000 ordinary shares and 1,000,000 shares of 6% Pog par value cumulative preference shares. During the recession of the past two years, NMB suspended all dividend payments. This year NMB returned to profitability, ang the board of directors declared a P1 per share ordinary shares dividend to be paid at the end of the year. How much would NMB have to pay in dividends this year? 5,000,000 P11,000,000 P17,000,000 P23,000,000 paoge APL Corporation has a 6% participating preference shares issue, along with a ordinary shares issue. Which of the following statements is true? a. Participating preference shareholders receive a minimum dividend payment of 6%. . b. Participating preference shareholders receive an average dividend payment of 6%. Participating preference shareholders receive only 6% in dividends. d. Participating preference shareholders receive a maximum dividend payment of 6%. An investor owns 1,000 shares of GDM Corporation when the corporation announces a 1-for-4 reverse share split. Before the share split, GDM's stock was trading at P1.50 per share. After the share split, what ownership position will the investor have? 4,000 shares at PO.37 per share 1,000 shares at P6.00 per share 250 shares at P1.50 per share 250 shares at P6.00 per share pose A corporation has 6% participating preference shares. What does the 6% mean? 7-28 | WIN Ballada’s Partnership and Corporation AccountingMaximum dividend paym, ue, ei Minimum dividend payment actual dividend payment None of the above ich of the followin : ue dividend? 8 corporation accounts are not affected by the payment of a |, shareholder's Equity | Total Assets i, Long-Term Liabilities \v, Retained Earnings a. Will, and iv b. bll,and it ¢ Iill, and iV 4. WU Ml and iv , Which of the following transactions does not decrease working capital? |, Paying a cash dividend 11, Declaring a cash dividend i. Purchasing the corporation's own ' ; ste tt oe fock using the proceeds from newly issuéd IV, Leasing long-term equipment, which is transacted as a capital lease a. JL lll, and IV b. Ill, andiv cL land il d. 1,11 Ill, and iv A share split by @ corporation affects which account on the statement of financial position? a. Retained Earnings b. Shareholder's Equity Share Premium 4. Par Value A corporation has 800,000 ordinary shares outstanding. Recently, the corporation bought 100,000 shares of its own stock. At the end of the year, the corporation has 320,000 available to distribute to ordinary shareholders. What are the dividends Paid per share? a 0.40 b. Po.46 & 2.19 4. P2.so Chapter 7: Retained Earnings | 7-29Ee [Secrog [rss Muttiple Choice 1. When preference shareholders have the right to recelve a specified dividend ang 1, receive more after a matching dividend percentage Is given to ordinay shareholders, the preference shares are said to be c. convertible. a. callable. d._ participating. b. cumulative. 2. A corporation declared cash dividends on its ordinary shares in Dec. 2018, payabje in Jan, 2019. Retained earnings will decrease on the date of payment. increase on the date of declaration. not be affected on the date of payment. not be affected on the date of declaration. aos 3. Dividends shall be declared and paid out of a. profits earned in selling no-par value shares. b. rétained earnings. ©. share capital. d. share capital. 4. How would the declaration of a 15% share dividend by a corporation affect each of the following? Retained Earnings Total Shareholders’ Equity a No effect Noeffect b. No effect Decrease ‘. Decrease No effect d. Decrease Decrease 5. Adeficit appears on the statement of financial position @._asa deduction from Income Taxes Payable. b. asa deduction from total share capital © among the liabilities. . among the assets. 7-30 | WIN Ballada’s Partnership and Corporation Accountingst18tMPUTPOSE OF a Share cain djust the market ‘ ewiduals can afford ae OF the corporation's shares to a level where more i ‘est in the stock. spread shareholder anv °Stt : i ae aca Naes increasing the number of outstanding shares, ‘ roportionately the par yan Of shares outstanding thereby increasing poth “a” and “b” : 4 income SUMMALY acco INt OF a pr ip is closed to the ov ; for a corporation Proprietorship is closed to the owner's Capital counts ’ INcome Summary is closed to retained Earnings, Sc aaeet ney Share Premium, », ord d. Donated Capital. ie al entry to rex re jour " Cord the declaration of a large share dividend includes debit to Retained Eapny distributed. “NINES for the market value of the shares to be acredit to Shares Distributable for < acredit to Share Premium, for the the par value of the shar Sf es tobe 4, adebit to Retained Earnings for ¥ the fair value of the shares to be distributed, e difference between the fair market value and distributed. the par value of the shares to be distributed. a positive prior period adjustments b. share dividends declared ¢. cash dividends declared loss for the period 38 Which of the following combination of dates accurately describes when Journal entries are required to record dividends? Declaration Record Payment Date Date Date a Yes Yes Yes b Yes No No © No No Yes 4 Yes No Yes UL Arestriction on retained earnings & reduces retained earnings available for the declaration of dividends. b. can be reported by an entry appropriating retained earnings. Chapter 7: Retained Earnings | 7-31©. has no effect on total retained earnings. d. all of the above 12. The number of ordinary shares outstanding would be decreased by the Purchase of Share Dividend Treasury Stock a No No b. No Yes e Yes Yes a. Yes No 13. Ashare dividend decreases shareholders’ equity. decreases assets. leaves total shareholders’ equity unchanged. none of the above ange 14. Ramirez Corp. owned shares in Tayabas Corp. On Dec. 1, 2019, Ramirez declareg and distributed a property dividend of Tayabas shares when their fair market value exceeded the cost. As a consequence of the dividend declaration and distribution, the accounting effects would be Retained Earnings Property Dividends at a Decreased Fair market value b Increased Fair market value « Increased Cost a. Decreased Cost 15. How would retained earnings be affected by the declaration of each of the following? Share Dividend Share Split a Decrease Decrease b. No effect Decrease © No effect No effect 4. Decrease No effect 16. When a small share dividend is declared, Retained Earnings is debited for zero; it is not affected by the declaration of a small share dividend. the liquidation value of the shares to be distributed. the fair market value of the shares to be distributed. the par value of the shares to be distributed. peso 7-32 | WIN Ballada’s Partnership and Corporation Accounting! —<— PROFESSOR: patching Type 4. Share divideng 7 2. Prior period error 3. Small share dividends . Appropriation of rere, ' a Date ofrecorg "#4 earnings 6. Declaration date 7. Large share dividends 8, Share split 9. Treasury stock 40. Deficit a, Acorrection to Retained Earnings for an error of an earlier period, b. Ashare dividend of 20% or ore of the corporation’ outstanding shares. ¢.Ashare dividend of less than 20% Of the corporation's outstanding shares. 4. proportional distribution by a Corporation of its own shares that affects only the shareholders’ equity section Of the statement of financial position. e. An increase in the number of Outstanding shares of stock coupled with a Proportionate reduction in the par value of the stock. f. Date on which the board of directors announces the intention to pay a dividend, & Date on which the owners of stock to receive a dividend are identified. h. Restriction of retained earnings that is recorded by a formal journal entry. i, The stock that a corporation issues and later reacquires. ‘ J. Adebit balance in Retained Earnings, Chapter 7: Retained Earnings | 7-33a ee ——————Troresson Multiple Choice : issued 100,000 ordinary shi these, 5,000 3 - ear ra 2018. During 2019, transactions involving Cebedo’s shares were as follows: May3 1,000 shares of + Aug.6 10,000 shares of ares. Of these, 5,000 were held as teas, ordinary reasury stock were sold. previously unissued share were sold. Nov.18 A2-for-1 share split took effect. ‘At Dec. 31, 2019, how many ordinary shares are issued and outstanding: Shares Issued 220,000 220,000 222,000 222,000 ae re Shares Outstanding 212,000 216,000 214,000 218,000 2. How would total shareholders’ equity be affected by the declaration of each of the following? Share Dividends a No effect b, Decrease + « Decrease d, No effect Share Split Increase Decrease ‘ No effect No effect 3. The following information pertained to T. Lianza Corporation: © Dividends on its 1,000 shares of 6%, P10 par value cumulative preference shares have not been declared for three years. * Treasury stock that cost P15,000 was reissued for P8,000. What amount of retained earnings should be appropriated as a result of these items? PO P1,800 P7,000 8,800 7-34 | WIN Ballada’s Partnership and Corporation AccountingCorp.'s stat e Be llowit | yanueva “4 fement of financial position reported the following I wrens equity: m Oe f 5% Cumulative Preference sh; 2,500 shares issued and cn aa and ordinary Shares, P3.50 par aes 250,000 shares issued and outstanding 350,000 share Premium-Ordina; , Retained Earnings 125,000 300,000 pividends in arrears on the re to be liquidated, th premium of P50,000. Th Preference shares amounted to P25,000. if Villanueva '¢ Preference shareholders would receive par value plus a ' book value.per share of ordinary shares is P7.75- 7.50. ?7.25. P7.00. cone es 700,000 ordinary shares authorized and 300,000 shares outstanding + 31, 2018. ‘The following events occurred during 2019: Jan.31 Declared 10% share dividend. i June 30 Purchased 100,000 shares ‘Aug.1 Reissued 50,000 shares, Nov. 30 Declared 2-for-1 share split, ‘At Dec. 31, 2019, how many Outstanding shares did Coronado have? a, 560,000 b. 600,000 c, 630,000 4, 660,000 6, Briones Corp.'s outstanding shares at Dec. 31, 2019, consisted of the following: * 30,000 shares of 5% Cumulative Preference Shares, P10 par value, fully participating as to dividends. No dividends were in arrears, * 200,000 Ordinary Shares, P1 par value. , On Dec. 15, 2019, Briones declared dividends of P100,000. What was the amount of dividends payable to Briones’ ordinary shareholders? 10,000 34,000 40,000 47,500 aes Chapter 7: Retained Earnings | 7-35in ' ar value per share decreases in propor ee ee: ad ‘affect each of the following? ion tg the number of additional shares petained share s Premium Se nee No effect a increas pep b. No effect Decrease , ae Decrease 4 increase dividend on its 10,000 issued and Outstandi shares of P2 par value ordinary shares, which hada fair ies ene ei PS per share ivi is share dividend was distribute hare dividend was declared. This shat d Soe aes date. By what amount did €, Panopio’s current liabilities increase as a result of the share dividend declaration? 8. . Panopio Corp. declared a 5% share a PO b. P 500 ¢. P1,000 d. 2,500 9. A corporation declared a cash dividend on its ordinary shares on Dec. 15, 2018, payable on Jan. 12, 2019. How would this dividend affect shareholders’ equity on the following dates? Dec. 15, 2018 Dec. 31, 2018 Jan, 12, 2019 a Decrease No effect Decrease b Decrease No effect No effect c No effect. Decrease No effect d. No effect No effect Decrease 10. At Dec. 31, 2018 and 2019, P. Tulio Corp. had 3,000 shares of P100 par, 5% ‘cumulative preference shares outstanding. No dividends were in arrears as of Dec, 31, 2017. P. Tulio did not declare a dividend during 2018. During 2019, P. Tulio paid a cash dividend of P10,000 on its preference shares. P. Tulio should report dividends in arrears in its 2019 financial statements as an accrued liability of P20,000. an accrued liability of P15,000. a disclosure of 20,000. a disclosure of P15,000. 11. On July 1, 2019, Aguila Corp. has 200,000 shares of P10 par ordinary shares outstanding and the market price of the stock is P12 per share. On the same date, Aguila declared a 1-for-2 reverse share split. The-par value of the share was increased from P10 to P20 and one new P20 par share was issued for each two P10 7-36 | WIN Ballada’s Partnership and Corporation Accountinga B. 14, shares outstanding, Immediately before the 1-for-2 reverse share split, Aguila’s aa oreo as P450,000. Whar should be the balance In Agula’s share 450,000 "650,000 4, °850,000 perdio COrP. had 100,009 Ordinary shares issued and outstanding on Jan. 1, 2019. puring 2019, Perdio took the following actions: at ae 2-for-1 share split, when the fair market Ue of the share w: hh : 1S /as P80 per share. i Declared a P0.50 per share cash dividend. "Sst Ia Perdio’s statement of changes in stiarcholders’ Se should Perdio report as dividende> ‘a. P950,000 . 850,000 ¢, 100,000 d. P 50,000 M. Penaflor Corp. declared a property dividend of trading investments to be distributed on Dec. 31, 2019, to shareholders of record on Dec, 15, 2019. On Dec. 1, 2019, the trading investments had a cost of 60,000 and a fair market value of 78,000. What i i is the effect of this property dividend on M. Penaflor’s 2019 retained earnings, after all nominal accounts are closed? 78,000 decrease P60,000 decrease 18,000 increase PO aoge A. Manansala Corp. declared and paid a liquidating dividend of P100,000. This distribution resulted in a decrease in A. Manansala’s Share Capital Retained Earnings a No No b Yes Yes © No Yes 4 Yes No Chapter 7: Retained Earnings | 7-37= Multiple Choice 1, Manaloto Trade, inc. has 10,000 shares of 7% P50 par preference shares, ang 100,000 shares of PA par ordinary shares outstanding. TWO Years’ preference dividends are in arrears. Manaloto Trade declared a cash dividend large enough t, pay the preference dividends in arrears, the preference dividends for the curren period, and a P1.50 dividend to ordinary. What is the total amount of the divideng) * P105,000 150,000 220,000 P255,000 pose 2. On Jan. 5, 2019, Sanchez Minerals Corp. declared a cash dividend of P6,000,000 to shareholders of record on Jan. 21, 2019. It was payable on Feb. 11, 2019. The following data pertained to 2018: Profit for year ended 12/31/2018 1,900,000 Share Premium, 12/31/2018 6,750,000 Retained Earnings, 1/1/2019 4,250,000 ‘The P6,000,000 dividend included a liquidating dividend of a. 4,850,000. b. P4,100,000. ¢. P1,750,000. d. PO, 3. Estrada Corporation has 5,000 shares of 6% cumitlative, P100 par value, preference shares outstanding and 175,000 ordinary shares outstanding. The corporation has Paid no dividends since May 31, 2018. For the year ended May 31, 2020, Estrada had profit of P1,450,000 and wishes to pay ordinary shareholders a dividend equivalent to 25% of profit. The total amount of dividends to be paid by Estrada Corporation at May 31, 2020 is 422,500. 407,500. P392,500. P362,500. aeoe 7-38 | WIN Ballada’s Partnership and Corporation AccountingCorp. acquired pangan 4,000 4 for P660,000. On Noy, 39, shares Of Agustin, inc. ordinary shares on Oct. 20, 2018 when the market price of the Required: Prepare the financing activities section of the statement of cash flows. 7-72 | WIN Ballada’s Partnership and Corporation Accounting_ em #34 wk value per Share yen the shareholders’ equity section ofthe Flores Corporation’s statement of financial é gestion below, what Is the book value per share for both the preference and the eegnary shares? snare Capital Preference ‘Shares-P100 per share, 8% ¢ cumulative, 10,000 shares authorized, 500 shares issued and outstanding* P 50,000 Ordinary Shares-P10 par, 100,000 : shares authorized, 40,000 shares issued and outstanding share Premium-Ordinary Total Share Capital 400,000 516,000 916,000 P 966,000 retained Earnings Bot Shareholders’ Equi 19410007 Total quity 1,241,000 * The preference shares has a liquidation value of P104 per share, ‘and current year's dividends are in arrears. problem #35 Book Value per Share Domingo, Inc. was organized on Jan. 2 with the following capital structure: 10% Cumulative Preference Shares, par value 1,000 and liquidation value P1,050; authorized, issued and outstanding 1,000 1,000,000 shares Ordinary Shares, par value P250; authorized 100,000 shares; issued and outstanding 10,000 shares 2,500,000 Domingo's profit for the first year ending Dec. 31 was P4,500,000, but no dividends were declared. . . Required: 1. Whats the book value per preference share at Dec. 31? 2. What is the book value per ordinary share at Dec. 31? Chapter 7: Retained Earnings | 7-73—<_——— a Problem #36 Book Value per Share is currently selling on a stock exchange at p17 Lusteri ion’s ordinary shart Pi rio Corporation's ordinaty Ut” of financial position showed the following per share, and a recent stateme! information: Shareholders’ Equity Preferehce Shares, 5%, P? par value, 1,000 shares ‘authorized, issued and outstanding Ordinary Shares, P? par value, 4,000 shares ‘authorized, issued and outstanding 160,000 Retained Earnings Total Shareholders’ Equity 100,000 Required: 1. What is the market value of the ordinary shares? 2. What are the par values of the preference shares and ordinary shares? 3. If no dividends are in arrears, what are the book values per share of the preference and ordinary shares? 4. Iftwo years’ preference dividends are in arrears, what are the book values per share of the preference and ordinary shares? 5. If two years’ preference dividends are in arrears and the preference shares has a liquidation value of P10 per share, what are the book values per share of the preference and ordinary shares? 7-74 | WIN Ballada’s Partnership and Corporation Accounting