Problem 10-1

Book value per share (8,800,000 / 50,000) 176

Problem 10-2

Excess Preference Ordinary

a. Balances 3,000,000 1,000,000 4,000,000
12% x 1,000,000 x 2 ( 240,000) 240,000
12% x 4,000,000 ( 480,000) 480,000
Balance for participation 2,280,000 456,000 1,824,000
Total 1,696,000 6,304,000
Divide by shares outstanding 10,000 40,000
Book value per share 169.60 157.60
b. Balances 3,000,000 1,000,000 4,000,000
12% x 1,000,000 x 2 ( 240,000) 240,000
15% x 4,000,000 ( 600,000) 600,000
Balance for participation 2,160,000 432,000 1,728,000
Total 1,672,000 6,328,000
Divide by shares 10,000 40,000
Book value per share 167.20 158.20
c. Balances 3,000,000 1,000,000 4,000,000
12% x 1,000,000 x 2 ( 240,000) 240,000
12% x 4,000,000 ( 480,000) 480,000
Balance for participation 2,280,000
4% x 1,000,000 40,000 2,240,000
Total 1,280,000 6,720,000
Divide by shares 10,000 40,000
Book value per share 128 168

174

Excess Preference Ordinary

d. Balances 3,000,000 1,000,000 4,000,000
12% x 1,000,000 x 2 ( 240,000) 240,000
To ordinary 2,760,000 _________ 2,760,000
Total 1,240,000 6,760,000
Divide by shares 10,000 40,000
Book value per share 124 169
e. Balances 3,000,000 1,000,000 4,000,000
12% x 1,000,000 ( 120,000) 120,000
To ordinary 2,880,000 _________ 2,880,000
Total 1,120,000 6,880,000
Divide by shares 10,000 40,000
Book value per share 112 172
CHAPTER 11

Problem 11-1 Problem 11-2

1. D 6. A 11. D 1. C 6. B
2. B 7. B 12. A 2. B 7. A
3. D 8. B 13. B 3. B 8. A
4. A 9. B 14. A 4. B 9. C
5. D 10. A 15. B 5. A 10. A

Problem 11-3
1. Basic earnings per share:
Income from continuing operations (3,400,000 / 50,000) 68
Loss from discontinued operations (600,000 / 50,000) (12)
Net income 56

2. Basic earnings per share:

Income from continuing operations 3,400,000
Less: Preference dividend (10% x 2,000,000) 200,000
Income to ordinary share 3,200,000
Income from continuing operations (3,200,000 / 50,000) 64
Loss from discontinued operations (12)
Net income 52