MAS Company has 420,000 shares of P10 par value ordinary shares outstanding

Finance May 27, 2021

MAS Company has 420,000 shares of P10 par value ordinary shares outstanding. During the year MAS declared a 20% share dividend when the market price of the shares was P36 per share. Three months later MAS declared a P.60 per share cash dividend. As a result of the dividends declared during the year, retained earnings decreased by

Expert Solution

Computation of Decrease in Retained Earnings:

Stock Dividend = 420,000 *20% * P36 = P3,024,000

Cash Dividend = 420,000 *120% * P0.60 = P302,400

Decrease in Retained Earnings = P3,024,000 + P302,400 = P3,326,400

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