____ 1 At the current year-end, Grey Company issued 4,000 ordinary shares of P100 par

value in connection with a stock dividend. The market value per share on the date of declaration was
P150. The shareholders’ equity accounts immediately before issuance of the stock dividend shares were
as follows:

Ordinary share capital P100 par, 50,000 shares

authorized, 20,000 shares outstanding 2,000,000
Share premium 3,000,000
Retained earnings 1,500,000

What amount should be reported as retained earnings immediately after the stock dividend?
a. 1,100,000 c. 2,100,000
b 1,500,000 d 900,00
. .
____ 2. Ray Company declared a 5% stock dividend on 100,000 issued and outstanding
shares of P20 par value, which had a fair value of P20 per share before the stock dividend was declared.
This stock dividend was distributed 60 days after the declaration date.

What is the increase in current liabilities as a result of the stock dividend declaration?
a. 250,000 c. 150,000
b 100,000 d. 0
.
____ 3. solace Company declared and distributed 10% stock dividend with fair value of
P1,500,000 and par value of P1,000,000, and 25% stock dividend wit fair value o P4,000,000 and par
value of P3,500,000.

What aggregate amount should be debited to retained earnings for the stock diveidends?
a. 4,500,000 c. 5,000,000
b 3,500,000 d 5,500,000
. .
____ 4. At the beginning of the current year, Flash Company had retained earnings of
P4,000,000. During the year, the entity reported net income of P2,000,000, sold treasury shares at a
“gain” of P720,000, declared a cahs dividend of P1,200,000, had declared and issued a small share
dividend of 60,000 shares with P10 par value when the fair value of the share was P20

What is the amount of retained earnings available for dividends at the end of the current year?
a. 3,600,000 c. 4,320,000
b 4,200,000 d 4,920,000
. .