P.

15-8

Answer :

a) Assuming Myers Co. declares and pays a €.10 per share cash dividend.
1) Total assets—decrease €4,000 [(€20,000 ÷ €5) X €1]
2) Share capital—ordinary—no effect
3) Share premium—ordinary—no effect
4) Retained earnings—decrease €4,000
5) Total equity—decrease €4,000

b) Myers declares and issues a 10% share dividend when the market price of the
stock is €14.
1) Total assets—no effect
2) Share capital—ordinary—increase €2,000 (4,000 X 10%) X €5
3) Share premium—ordinary—increase €3,600 (400 X €14) – €2,000
4) Retained earnings—decrease €5,600 (€14 X 400)
5) Total equity—no effect
c) Myers declares and issues a 30% share dividend when the market price of the
stock is €15 per share.
1) Total assets—no effect
2) Share capital—ordinary—increase €6,000 (4,000 X 30%) X €5
 3) Share premium—ordinary—no effect
4) Retained earnings—decrease €6,000
5) Total equity—no effect

d) Myers declares and distributes a property dividend

1) Total assets—decrease €14,000 (2,000 X €7)— €6,000 gain less
€20,000 dividend.
2) Share capital—ordinary—no effect
3) Share premium—ordinary—no effect
4) Retained earnings—decrease €14,000—€6,000 gain less €20,000
dividend.
5) Total equity—decrease €14,000

*Catatan :
The journal entries made for the above transaction are:
Investments in ABC Stock (€10 – €7) X 2,000.............................. 6,000
Gain on Appreciation of Securities.......................................... 6,000
(To record increase in value of
securities to be issued)

Retained Earnings (€10 X 2,000)..................................................

20,000
Investments in ABC Stock...................................................... 20,000
(To record distribution of property dividend)

e) Myers declares a 2-for-1 share split

1) Total assets—no effect
2) Share capital—ordinary—no effect
3) Share premium—ordinary—no effect
4) Retained earnings—no effect
5) Total equity—no effect