Question

kindly provide explanations

Instructions: Record the declaration Record the declaration and distribution of the above dividends. Exercise 9-7 Allocation of Cash Dividends to Preference and Ordinary Shareholders) The STU Co. has paid dividends for the last three years as follows: 2012 - P2,500,000; 2013 - P3,500,000; 2014 - P6,500,000. During the last three years, the company has the following outstanding share capital: 100.000 shares of P100 par, 12% Preference Share Capital and 500,000 shares of P10 par Ordinary Share Capital. Dividends are in arrears for two years at the beginning of 2012.

Answer 1

Non-cumulative and Non Participating Preference Particulars Common shares Shares Totat 12% igoooo shar Proo por $1,200,000 1,300,000 2, (100,00 XPI 00X129.) (2,509000 (6,200,000) 2012 2013 Cuorent year dividend 1,209000 2,300,000 (100,000 XP100x127)(3, 500 000 - 1,209 000) 2014 Current year 5,300,000 (,suyooo - ), 209000) 1,200,000 (100,000 8100 812%) G dividend 3 Cumulative but non - Participating Reference Particulars Shares Common stock Year Dividend in 2,400,000 2012 arrears Cicerowe mw X12% *2) Current Year 100,000 (2,500,000 - 2,409000)

Particulars Preference shares Common Shaxes Year in Dividends arrears 1,100,000 (1,200,000 -100,000) 2013 Current Year dsvidend 1,209 000 1,200,000 (3,500,000 - 1,100,000 - 1,200,000 2014 Current year dividend 1,200,000 5,300,000 (6.507.000 - 1,209.00) but Participating 1. Non-Cumulative Year 2012 Current year dividend Preterrence dividend 12% of 100, ad Share 100 par => 1,200,000 Common dividend 12% of (soo, ooo share lopar) > 500,000 Thor Even Common shares same % of I dividend as preferrence shares / 1,800,000 Amount available for postupation 700.000 (2509 000- 1,800,000) Pas Value of the stock thats is to participate 15,000,000 Clorocco Share 100 pao) +(s)[000 sharel, rupan) Rate of Participation 709000 4.67% 15,009 ooo

Participating dividend Preference sh Serrance shares 1000 (100,000 X 100 X 4-67%) 4466,667 4,64,666 common shares (500,000 X 108* 4.697.) 233,333 2013 15,000000 700,000 Current year dividend 1,800,000 (1,200,000 + 606000) Amount available for Partripation 1,700,000 (3,500,000 - 1,800,000) Pao Value quailable Rate of Paz hecipation 1,700,000 > 1.334. 155,000,000 Participating dividend Preferrence shares 7,133,333 (100,000 *100X11.33%) Common shares 566, 667 (500,000 $10X 11,33%) 1,700,000 2014 Current year dividend 1,800,000 Amount Quailable for participation 4,700,000 (6,500,000 - 1,800,000) o 15,000,000 Par value available 4,700 000 a 31.33% Rate of Partiapation - 15,000 000 Participating dividend Preference shares (10127 000 8100,4 31.337) -> 3, 133, 333 Common shares (son 000 Xlo y 31.337.) ], 566,667 e porooo

Particularle preferrence shares I Common shares 1,200,000 600,000 2012 Current Year dividend I Participating 4 66, 667 dividend 233,333 I current Year 1,200,000 600,000 5 G6, G67 2013 1, 133, 333 Participating current year Participating 1,200,000 3,133,333 600,000 1,566, 667 2,5-09000 Cumulative and Participating 2012 Douidend s coreans Total Available dividend ( Dividend in arease (100,000 X100*12%*2) Coment Year dividend for Preferrence Neorears of dividend to (,401 000) 100,000 11100,000 preference share (1,200,000 -109000) No common shares dividend. So 2013 Total available dividend 6) Dividends in arrears Current year dividend Amount available to participate 3,500,000 1,100,000 1,800,000 600,000 &

Rate of Participation Par Value 15,00,000 600000 15,000,000 Participating dividend Preference shares (100,000 * 100% 4%) -> 400,00 Common shares (500,000 X 10 X4%) = 200,000 2014 Total Available dividend G, SO6,000 Current Year dividend 1,800,000 Dividend available to participate 4,700,000 Pas Value 15,000,000 Rate of participation . 4,700,000 1900 -> 31.33% 15,000,000 Participating dividend Preferrence shores 3, 133,333 C100,000 X/00731.33%) Common shares | 1,566,667 500,000 *10X 31,33 %) 1 Particulars Preferrence Shares Common shares Dividend in 2,400,000 agrears Current Year 100,000 Wood Drvidends in arrears Current year 1 1,100,000 1,200,000 12013 600,000 209000 Participating dividend 400 000

1,200,000 600,000 Current year Participating eoru 3,133,333 I 1,566, 667 La Non-Cumulative but participating upto 8% Year 2012 Total Dividend 2,500,000 Current year dividend 1,800,000) Participating dividend 700,000 Rate of participation, 700,000 Participating dividend Preferrence shares > 466,667 Common shares -) 233,333 15,000,0)) 4.667% 2013 Total dividend 3,500,000 Current yeary dividend (800,000) Aavalable to perstic pation => 1,900,000 Pas value .) 15,000,000 Rate of participation - 1,700,000 11.33% 15,000000 but only ugh 8% have participating rights So Participating dividend to preference share, Only 86 • Paghicipaling dividend Preference shores 800,000 Clog 000810078%) 900, 000 Common shares o C1,700,00) - FCG000)

2014 Total dividend 6,500,000 Current year dividend 10800,000 Available to partcipate 4,700,000 Rate of portrapation » 31.33% Paotic apating dividend Prelepence shares =) 800,000 (100,0 00 8100*87.7 Common shares C4,700,000 ~400,000) y 3,900,000 Particulars Preference shares Common Shares Current year 1,200,000 600,000 Participating 466, 667 233,333 Year 2012 2013 1 1,200,000 800,000 600,000 900,000 Crorent Year Participating Current year participating 2014 600,000 1,200,000 800,00 3 900,000