Retained Earnings Mrs. Paz Castro

On the other hand, investors in the stock market may utilize book value as one of the basis for evaluating whether a stock is undervalued or not. It is also significant in many contracts and in court cases where the rights of the individual parties are based on cost information.




Homework 7

□
Indicate whether the following actions would (+) increase, (-) decrease, or (0) not affect the corporation’s total assets, liabilities and shareholders’ equity.

Assets Liabilitie Shareholders s ’ equity

1. Declaring a cash dividend

2. Paying the cash dividend declared in # 1

3. Declaring a share dividend

4. Issuing share certificates for the share dividend declared in # 3

5. Authorizing and issuing share certificates in a share split

□ Ysmael Corporation’s board of directors declared a P750,000 cash dividend on Sept. 1, 2011, payable on Oct. 1, to shareholders of record on Sept. 15. Prepare all appropriate entries needed on the declaration, record and payment dates.

Seatwork 7

□

Indicate the effects of each of the following transactions on Assets, Liabilities, Share Capital and Retained Earnings. Use + for increase, - for decrease and 0 for no effect.

Assets
Liabilitie s
Share Capita l
Retaine d Earning s

• Declaring of cash dividends
• Payment of cash dividends
• Declaration of share dividends
• Issuance of share dividends
• A share split
• Cash purchase of treasury stock
• Sale of treasury stock below cost

• The dates of importance in connection with a cash dividend of P35,000 on a corporation’s ordinary shares are Jan. 2, Jan. 22, and Feb.
• Journalize the entries required on each date.