INTERIM FINANCIAL REPORTING

Angeles Co. is preparing its interim financial statements. The following relate to the transactions during
2019.

a.) Total Sales for 2019 is P15, 000,000, the breakdown is as follows:

First Quarter : 30%

Second Quarter : 10%

Third Quarter : 20%

Fourth Quarter: 40%

Gross profit rate is 50% of cost

b.) Salaries Expense were P1, 500,000 for the year

c.) Selling expense were 3% of sales

d.) The monthly rental was P20,000. The lease contract also provide for contingent rent of 2% in excess
over P800,000 of sales during the quarter.

e.) The Beginning Property, Plant and Equipment balance has a depreciation of P250,000 during the
year.

d.) The Company purchased additional equipment during February costing P240,000 with 2 years useful
life (straight-line depreciation)

e.) The company incurred Advertising costs worth P120,000 for the 3-month period starting June.

d.) The company paid for repair cost during November, P 55,000

e.) The company sold land with a cost of P120,000 for P100,000 during October.

f.) Warranty expense was estimated for 2% of sales. During the third quarter, the estimate was changed
to 5% of sales.

g.) The fair value of FAFVPL acquired during February 1, 2019 for P100,000 had a fair value of P80,000 on
March 31, 2019. It was expected that the fair value decline was temporary. On June 30,2019, the
recovery exceeded the previous write-down in investment by P50,000.

h.) Bonus to the manager was 10% before bonus and tax.

1.) Compute for The Profit for First, Second, Third and Fourth Quarter (assume no tax)

2.) Assume that the Tax Rate is 30 % for the First and Second Quarter. The tax rate has been changed to
40% during third quarter. Compute for the profit for the first, second, third and fourth quarter.

OPERATING SEGMENTS

Cuaresma Corporation is preparing its year-end financial statements and has identified the following
operating segments:

Segmen External Revenues Inter-Segment Total Revenues Profit Assets

t Revenues
A 1,000,000 100,000 1,100,000 (700,000) 2,800,000
B 400,000 250,000 650,000 200,000 2,000,000
C 300,000 50,000 350,000 150,000 400,000
D 100,000 0 100,000 15,000 300,000
E 150,000 300,000 450,000 ( 65,000 ) 1,500,000

Instruction: Identify the Operating Segments.

EARNNGS PER SHARE

Concepcion Company had 250,000 ordinary shares outstanding on January 1, 2018.

During 2018 and 2019, the following transactions were recorded :

2018 April 1 Sold 10 ,000 shares

July 1 Issued a 10 percent stock dividend

September 1 Sold 18,000 shares

December 1 Purchased 12,000 shares to be held in treasury

2019 June 1 3 for 1 share split

October 1 Sold 80,000 shares

Additional Information was given:

1.) The company reported net income of P1, 000,000 for the year of 2018 and P1, 500,000 for the year
2019.

2.) The company has P50 par value, 10,000 convertible preference shares , the preference shares were
noncumulative. No preference dividends were declared during 2018 and 2019.

3.) One preference share is convertible into 3 ordinary shares. During April 1 , 2019 , 5,000 preference
shares were converted. This transaction was not recorded in the list of transactions presented above.

4.) The company has P1, 000,000, 10% bonds convertible into 30,000 ordinary shares. The Income tax
rate is 30%

5.) On January 1, 2019 , the entity issued share options that allowed employees to purchase 40,000
ordinary shares. The option price is P20 per share. The average share price was P10.

QUESTIONS:

1.) What is the amount of weighted average number of shares for 2018 to be used in earnings per share
computation for comparative financial statements at the end of 2018?

2.) What is the weighted average number of shares for 2019 to be used in the earnings per share
computation financial statements at the end of 2019?

3.) How much Basic EPS will be presented at the end 0f 2018?

4.) How much Basic EPS will be presented at the end 0f 2019?

5.) How much Diluted EPS will be presented at the end 0f 2018?

6.) How much Diluted EPS will be presented at the end 0f 2018?

BOOK VALUE PER SHARE

The capital accounts of Buenvida company have the following balances on December 31, 2015

12% Nonparticipating , noncumulative preference share capital, P1,000,000

Par value of P100, 10,000 shares

10% Fully participating , cumulative preference share capital, 2,500,000

Par value of P100, 25,000 shares

Ordinary Share Capital, par value of P100, 75,000 shares 7,500,000

The entity plans to declare cash dividends. It has not paid a cash or a stock dividend before, There has
been no change in the capital balances since Tundra started operations 5 years ago.

The entity reported the following new income and loss for the five years of operations.

2015 – 1,500,000 loss

2016- 1,000,000 loss

2017 – 500,000 loss

2018 – 1,750,000 income

2019 – 6,250,000 income

QUESTION: HOW MUCH IS THE BOOK VALUE PER SHARE AT THE END OF 2019 ?

A.) For the 12% Nonparticipating preference share

B.) For the 10% Participating preference share

C.) For the Ordinary share capital