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    Activity: Basic Earnings Per Share

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    bi2345
    1. Compute the average number of ordinary shares outstanding for the year and basic earnings per share for New Company. 2. Compute the average number of ordinary shares outstanding for the year and basic loss per share for Humor Company. 3. Compute the average number of ordinary shares outstanding for the year and basic earnings per share for Summer Company. 4. Compute the average number of ordinary shares outstanding for the year and basic earnings per share for Precise Company. 5. Compute the basic earnings per ordinary share and per preference share for London Company.

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    Activity: Basic Earnings Per Share

    Uploaded by

    bi2345
    2K views2 pages
    1. Compute the average number of ordinary shares outstanding for the year and basic earnings per share for New Company. 2. Compute the average number of ordinary shares outstanding for the year and basic loss per share for Humor Company. 3. Compute the average number of ordinary shares outstanding for the year and basic earnings per share for Summer Company. 4. Compute the average number of ordinary shares outstanding for the year and basic earnings per share for Precise Company. 5. Compute the basic earnings per ordinary share and per preference share for London Company.

    Original Title

    Activity 2.6.1

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    1. Compute the average number of ordinary shares outstanding for the year and basic earnings per share for New Company. 2. Compute the average number of ordinary shares outstanding for the year and basic loss per share for Humor Company. 3. Compute the average number of ordinary shares outstanding for the year and basic earnings per share for Summer Company. 4. Compute the average number of ordinary shares outstanding for the year and basic earnings per share for Precise Company. 5. Compute the basic earnings per ordinary share and per preference share for London Company.

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    © All Rights Reserved
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    Download as pdf or txt
    2K views2 pages

    Activity: Basic Earnings Per Share

    Uploaded by

    bi2345
    1. Compute the average number of ordinary shares outstanding for the year and basic earnings per share for New Company. 2. Compute the average number of ordinary shares outstanding for the year and basic loss per share for Humor Company. 3. Compute the average number of ordinary shares outstanding for the year and basic earnings per share for Summer Company. 4. Compute the average number of ordinary shares outstanding for the year and basic earnings per share for Precise Company. 5. Compute the basic earnings per ordinary share and per preference share for London Company.

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    of 2

    Activity: Basic Earnings per share

    Direction: Provide what is asked. Show your solution.

    1. New Company had the following ordinary share transactions for the current year.

    January 1 Beginning balance, 120,000 shares, P50 par


    June 1 Issued 12,000 shares at P 60 per share
    September 30 Purchased 24,000 shares at P55 per share to be held as treasury.

    The entity reported net income of P 3,630,000, after an expropriation loss of P 605,000 for the current year.

    Required:
    a. Compute the average shares outstanding
    b. Compute the basic earnings per share

    2. Humor Company had the following ordinary share activity during the current year:
    Shares
    January 1 Outstanding 150,000
    May 1 New shares issued 30,000
    July 1 Treasury shares acquired 12,000
    December 1 Treasury shares resold 6,000

    The entity had 100,000 cumulative preference shares outstanding during the year. The preference share has par value of P 50 a nd 12%
    dividend rate. The entity sustained a net loss of P 2,690,000 for the current year.

    Required:
    a. Compute the average ordinary shares outstanding
    b. Compute the basic loss per share.

    3. Summer Company hd the following ordinary share activity during the current year:
    Shares
    January 1 Outstanding 500,000
    March 1 New shares issued 60,000
    June 1 2 for 1 split 560,000
    November 1 Treasury shares acquired 48,000

    The entity had 200,000 cumulative preference shares of P 20 par value outstanding throughout the year. The preference dividen d rate is
    10%. The entity reported a net income of P 5,860,000 for the current year.

    Required:
    a. Determine the average ordinary shares outstanding
    b. Determine the basic earnings per share.

    4. Precise Company had a net income of P 15,000,000 for the current year. The fooling appropriations have not been considered in this
    amount:

    Arrears of cumulative preference dividend for 2 years 4,000,000


    Ordinary dividends 5,000,000
    Preference share premium payable on redemption 1,000,000
    Exceptional profit, net of tax 4,000,000

    The entity had 3,000,000 ordinary share of P 1 par outstanding at the beginning of the year. The following transactions occurred during the
    year;

    Jan. 1 Issued at P5 per share, P 1 paid to date and entitled to


    participate in dividends to the extent paid up 250,000
    Apr. 1 Full market price P 3 per share issue 600,000
    July 1 Purchase of own shares at P 3.50 per share 400,000

    Required:
    a. Compute the average ordinary shares outstanding
    b. Compute the basic earnings per share

    5. London Company had the following share capital at the end of the current year:
    Preference share capital, P 100 par, 30,000 shares 3,000,000
    Ordinary share capital, P50 par, 100,000 shares 5,000,000
    Net income for the year 2,600,000

    The preference dividend rate is 8% and the preference share is nonconvertible but cumulative and fully participating. After the ordinary
    share has been paid a dividend of P10 per share, the preference share shall participate in any additional dividend on a prorata basis with
    the ordinary share.

    Required:
    Compute for the basic earnings per ordinary share and per preference share.

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