Angeles, Myca

BSA501

Manila Co.

1. Determine the amount of basic earnings per share for this year.
Solution:
Net income /Numbers of outstanding shares
5,000,000 / 100,000
Basic Earnings per Share 50

2. Determine the amount of diluted earnings per share under each of the following scenarios.
A. Bonds were issued on January 1, 2X16, and there were no conversions made during the year.
Solution:
Diluted Earnings per Share = Net Income / Weighted Average Diluted / Outstanding number of shares
Weighted average Diluted numbers of shares = 100,000 shares x 20,000 shares x 12/12
Weighted average Diluted numbers of shares = 120,000 shares

Diluted Earnings per Share = 5,000,000 / 120,000

Diluted Earnings per Share 41.67

B. Bonds were issued on April 1, 2X16 and there were no conversions made during the year.
Solution:
Weighted average Diluted numbers of shares = 100,000 shares x 20,000 shares x 9/12
Weighted average Diluted numbers of shares = 115,000 shares

Diluted Earnings per Share = 5,000,000 / 115,000

Diluted Earnings per Share 43.48

C. Bonds were issued in the previous year and were converted on October 1, 2x16
Solution:
Weighted average Diluted numbers of shares = 100,000 shares x 20,000 shares x 3/12
Weighted average Diluted numbers of shares = 105,000 shares

Diluted Earnings per Share = 5,000,000 / 105,000

Diluted Earnings per Share 47.62
ach of the following scenarios.
ersions made during the year.

ed / Outstanding number of shares

0,000 shares x 12/12

ons made during the year.

0,000 shares x 9/12

October 1, 2x16

0,000 shares x 3/12