Activity: Basic Earnings Per Share
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bi2345Activity: Basic Earnings Per Share
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bi2345Activity: 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.
