Sasger

Sasger
zCourse Hero Logo
Search course documents, questions, and more
Expert Help
Study Resources
Log in
Join
Michigan State UniversityACCOUNTINGACCOUNTING 201CAT CUP 1 - DIFFICULT - CAT CUP ONE

DIFFICULT ROUND DIFFICULT 1. JM Company is contemplating on the appropriate depreciation pattern
to apply on one of
CAT CUP 1 - DIFFICULT - CAT CUP ONE DIFFICULT ROUND...
School
Michigan State University
Course Title
ACCOUNTING 201
Uploaded By
jslvdr
Pages
Ratings
100% (7)
This preview shows page 1 - 3 out of 4 pages.
Search this document
CAT CUP ONEDIFFICULT ROUNDDIFFICULT 1.JM Company is contemplating on the appropriate

depreciation patternto apply on one of its manufacturing equipment.YearStraight-lineSum-of-the-Years’
digitDouble-
decliningbalance174,400124,000160,000274,40099,20096,000374,40074,40057,600474,40049,60034,5
60574,40024,80023,840The cost of the machine isa. 400,000b. 380,000c. 372,000d. 360,000
DIFFICULT 2.RY Company’s stockholders' equity at January 1, 2012 is as follows:Common stock, P10 par
value; authorized200,000 shares; outstanding 75,000 sharesP 750,000Paid-in capital in excess of
par300,000Retained earnings730,000TotalP1,780,000During 2012, RY Company had the following stock
transactions:Acquired 2,000 shares of its stock for P90,000.Sold 1,200 treasury shares at P50 a
share.Retired the remaining treasury shares.No other stock transactions occurred during 2011.The
balances of Stockholders’ equity at December 31, 2012 if RY Company uses thecost method
Get answer to your question and much more
DIFFICULT 3.The following information was provided to you by Willow CompanyBookvalueTax

baseReceivable150,000200,000Building – net300,000100,000Machinery andequipment -
net500,000550,000Unearned revenue100,000-Estimated warrantyobligation80,000-Current and future
tax rate 30%.Taxable income for the year P300,000.Deferred tax asset
Get answer to your question and much more
11THREGIONAL MID YEAR CONVENTION
Related Textbook Solutions
See more
CAT CUP ONEDIFFICULT ROUND
Upload your study docs or become a
Course Hero member to access this document
End of preview. Want to read all 4 pages?

Term
Fall
Professor
BOKEMEIER
Tags
Accounting, Balance Sheet, Depreciation, Generally Accepted Accounting Principles, Biological Asset, RY
Company
Email IconURL Icon
Report
Students also studied
ADVANCED FINANCIAL ACCOUNTING1.docx
49
FAR-FIRST-PBOARD-MAY-2021-5.pdf
Practical accounting 06.docx
CAT CUP 1 - AVERAGE
3
Financial Statement Analysis_MAS_2020.pdf
17
4 QUIZ PROPERTY, PLANT AND EQUIPMENT 1.1.docx
11
Trending in ACCOUNTING 201
Auditing Theory CPAR Testbank
56
Business and Transfer Tax CPAR
27
Reviewers for DEDUCTIONS (Taxation).docx
30
MATER in MAS_Q&A
Test_prep
13
View more
Related Q&A
On January 1, 2020, an SME acquired a trademark for a line of products in a separate acquisition from a
competitor for 3,000,000. The SME expected to continue marketing the line of products using the
Q&A
1. You obtained the bank statement, paid checks, and other memoranda relating to Dela Cruz
Company's bank account for December 2021. In reconciling the bank balance at December 31, 2021, you
observed
Q&A
The following were taken from the statement of affairs of DUTCHMEN Corp.: Assets pledged for fully
secured creditors (estimated market value P150,000) P180,000 Assets pledged for partially secured
Q&A
Using the EOQ Model, Tokyo Company computed the economic order quantity for one of the materials
it uses in its production to be 4,000 units. The Company maintains safety stock of 300 units. The
Q&A
In 2018, IRIS Company paid $4,000,000 to purchase land containing a total estimated 160,000 tons of
extractable mineral deposits. The estimated value of the property after the mineral has been
Q&A
Work in process of Alonzo Corporation on July 1 ( per general ledger) is P 22,800. Per cost sheets:
Job 101 Job 102
Q&A
CAT CUP 1 - DIFFICULT
ACCOUNTING 201
CAT CUP 1 - DIFFICULT

Viewing now
Interested in CAT CUP 1 - DIFFICULT?
Bookmark it to view later.
Other Related Materials
CEL 1 PRAC 1 Answer Key
Test_prep
12
P1 Preweek1
PRAC-Q&A
Test_prep
15
CEL 1 PRAC 1 Answer Key
Test_prep
12
PRIA FAR 1810 Part 1 Problem-Solving (108).pdf
14
AA (14).doc
10
4 QUIZ PROPERTY, PLANT AND EQUIPMENT 1.1.docx
11
1-Quizzer-Audit-of-Property-Plant-Equipment-Classification-Depreicaiation-and-Depletion.pdf
19
Newly uploaded documents
part of the whole The nurses presence engagesunengages as Bens wishes are
Document
343
3 Progressivism very child centered teach those that interest the child one
Document
12
It was not so bad where there were only men or else only women it was when they
Document
Origin Chapter 19 10 10 The nurse is caring for an infant girl with a suspected
Document
14
Kami Export - Ramon Silveira Mattos - Interference of Waves Ex.pdf
2 Gross fiscal deficit is the excess of total expenditure including loans net of
Document
665
preferred issue has a Br 80 par value and pays an annual dividend of Br 640 per
Document
145
Which of the following paths is correct for Craig use in order to create a form
Document
A limited liability company LLC Select one a Has owners called members b Is
Document
14
PublicvsPrivateBudgetStrategiesPaperJulieSumpter.docx
5
a3.2.docx
a Reprimand the employee and put him on notice immediately b Ignore the
Document
184
BASICS_OF_COMPLEX_NUMBERS(1).ppt
71
ISABELLA ALFORD - Keystone Species and Trophic Cascades.pdf
A fourth factor affecting exchange rates is government controls The governments
Document
16
This module within the ERP system can map processes to assist management in
Document
560
IKEA Case Study Done-3.docx
Which of the following games in the Anno series introduced the quotEco
Document
reflection15.docx
Reserve bank of Australia 2022 Economic Outlook Statement on Monetary Policy May
Document
32
The statement refers to periodic stocktaking In continuous stocktaking a
Document
265
02_07_assignment_pop01.docx
Outline Review_Team Theta_V4.docx
14
week 8 final paper.docx
Left Quote Icon
Student Picture
Left Quote Icon
Student Picture
Left Quote Icon
Student Picture
Company
About Us
Scholarships
Sitemap
Q&A Archive
Standardized Tests
Education Summit
Get Course Hero
iOS
Android
Chrome Extension
Educators
Tutors
Careers
Leadership
Careers
Campus Rep Program
Help
Contact Us
FAQ
Feedback
Legal
Copyright Policy
Academic Integrity
Our Honor Code
Privacy Policy
Terms of Use
Attributions
Connect with Us
College Life
Facebook
Twitter
LinkedIn
YouTube
Instagram
SSL site seal
Better Business Bureau accredited business
TRUSTe
Copyright © 2022. Course Hero, Inc.
Course Hero is not sponsored or endorsed by any college or university.
CsaHAPTER 31
PAS 33- EARNINGS PER SHARE
BASIC EARNINGS PER SHARE
Simple Problems
PROBLEM 31-1 (AICPA Adapted)
On December 31, 2019 and 2018, Gow Company had 100,000 ordinary shares and 10,000 cumulative
preference shares of 5%, P100 par value. No dividends were declared on either the preference or
ordinary shares in 2019 or 2018. Net income for the current year was P900,000. What amount should be
reported as basic earnings per share?
A. 8.50
B. 9.50
C. 9.00
D. 5.00
Answer. A. 8.50
Preference share capital (10,000 x P100) 1,000,000
Net income. 900,000
Preference dividends (1,000,000 x 5%) (50,000)
Net income to ordinary shares. 850,000
BASIC EARNINGS PER SHARE (850,000/100,000 ordinary shares) P8.50
Whether cumulative or noncumulative, only one year preference dividend is deducted from net income.
If cumulative, the preference dividend is deducted regardless of declaration.
If noncumulative, the preference dividend is deducted only when declared.
PROBLEM 31-2(AICPA Adapted)
Royal Company reported the ff. capital structure on Jan. 1, 2019:
Shares issued and outstanding
Ordinary share capital 200,000
Preference share capital. 50,000

On October 1, 2019, the entity issued a 10% share dividends on ordinary shares and declared the annual
cash dividend of P200,000 on preference shares. The preference shares are noncumulative,
nonparticipating and nonconvertible.
Net income for the year ended December 31, 2019 was P1,920,000.
What amount should be reported as basic earnings per share?
A. 8.20
B. 8.72
C. 9.36
D. 7.82
Answer: D. 7.82
Ordinary shares - January 1, 2019 200,000
Share dividends on October 1, 2019(10% x 200,000) 20,000
Total ordinary share outstanding 220,000
Net income 1,920,000
Preference dividend (200,000)
Net income to ordinary shares 1,720,000
BASIC EARNINGS PER SHARE (1,720,000 / 220,000) P7.82
Note that the preference shares are noncumulative but the annual preference dividend is deducted
from net income because it was declared during the year.
Otherwise, the annual preference dividend is ignored in the absence of declaration.
Ute Company had the following capital structure during 2019:
Preference share capital, P10 par, 4% cumulative, 25,000 shares issued and outstanding 250,000
Ordinary share capital, P5 par value, 200,000 shares issued and outstanding 1,000,000
The entity reported net income of P500,000 for the year ended December 31, 2019.
The entity paid no preference dividends during 2018 and paid P16,000 preference dividends during 2019
a. 2.42
b. 2.45
c. 2.48
d. 2.50
Answer: b. 2.45
Net income 500,000
Preference dividend for 1 year(250,000 x 4%) (10,000)
Net income to ordinary shares 490,000
BASIC EARNINGS PER SHARE (490,000/200,000) P2.45
PROBLEM 31-4 (IFRS)
Smart Company reported a profit before tax of P5,800,000 and income tax expense of P1,500,000 for
the current year.
The entity paid during the year an ordinary dividend of P400,000 and a preference dividend of P500,000
on the preference shares.
The entity had a P1,000,000 of P5 par value ordinary shares in issue.
1. What amount should be reported as basic earnings per share if the preference shares are
redeemable?
A. 21.50
B. 19.00
C. 8.60
D. 7.60
Answer: A. 21.50
Ordinary share outstanding (1,000,000/5)
BASIC EARNINGS PER SHARE (4,300,000/200,000) 200,000
P21.50
The preference dividend is ignored because the preference shares are redeemable and considered as
financial liability.
The preference dividend of P500,000 is already deducted from the net income as a finance cost.
2. What amount should be reported as basic earnings per share if the preference shares are
nonredeemable?
A. 29.00
B. 19.00
C. 21.50
D. 16.50
Answer: B. 19.00
Net income
Preference dividend
Net income to ordinary share
BASIC EPS (3,800,000/200,000) 4,300,000
(500,000)
3,800,000
P19.00
In the absence of any contrary statements, the preference shares are nonredeemable.
PROBLEM 31-5 (IAA)
On January 1, 2019, Pink Company had 200,000 ordinary shares and 100,000 4% P100 par value
cumulative preference share outstanding.
No dividends were declared on either the preference or ordinary shares in 2018 and 2019.
On December 31, 2019, the entity declared a 100% share dividend on ordinary shares.
Net income for 2019 was P7,500,000.
What amount should be recorded as basic earnings per share?
A. 35.50
B. 37.50
C. 17.75
D. 18.75
Answer: C. 17.75
Net income
Preference dividend (4% x 10,000,000)

Net income to ordinary shares
Divided by ordinary shares
BASIC EARNINGS PER SHARE 7,500,000
( 400,000)
7,100,000
400,000
P 17.75
Original ordinary shares
Share dividend (100%)
Total ordinary shares 200,000
200,000
400,000
The share split should be retroactively applied to the earliest period presented.
Note also that the share split occurred prior to the issuance of the financial statements.
Otherwise, if the share split occurred after the issuance of the financial statements, the share split is
ignored.
PROBLEM 31-6 (IAA)
Laguna Company reported net income of P15,000,000 for the current year. The entity showed the
following shareholder’s equity at year-end:
Preference share capital 10% cumulative, P50 par value, 100,000 shares
Ordinary share capital, P100 par value, 300,000 shares
Share premium
Retained earnings
Treasury ordinary shares, 50,000 at cost
5,000,000
30,000,000
10,000,000
18,000,000
4,000,000
A. 58.00
B. 60.00
C. 73.60
D. 48.33
Answer: a. 58.00
Ordinary Shares issued (30,000,000 / 100 par value)
Treasury shares
Ordinary shares outstanding
Net income
Preference dividend (5,000,000 x 10%)
Net income to ordinary shares
BASIC EPS(14,500,000 / 250,000)
300,000
( 50,000)
250,000
15,000,000
( 500,000)
14,500,000
P58.00
Note that the numerator is net income reflecting all items including in profit or loss, such as casualty
cost.
PROBLEM 31-7 (IFRS)
On January 1, 2019, Sabina Company had ordinary share capital outstanding of P100 par value, 200,000
shares or a total par value of P20,000,000.
On July 1, 2019, a bonus issue was made in the ratio of one additional ordinary share for each original
share. The net income for the current year was P12,000,000.
A. 30
B. 40
C.60
D. 20
Answer: A. 30
January 1 Ordinary shares 200,000
July 1 Bonus issue 200,000
Total ordinary shares
EARNINGS PER SHARE (12,000,000/400,000) 400,000
P30.00
The bonus issue is the equivalent of a share dividend.

PROBLEM 31-8 (Application Guidance PAS 33)
On January 1, 2019, Gina Company had 300,000 ordinary shares outstanding, P100 par value or a total
par value of P30,000,000.
During 2019, the entity issued rights to acquire one ordinary share at P100 in the ratio of one share for
every 5 shares held.
The rights are exercised on March 31, 2019. The market value of each ordinary share immediately prior
to March 31, 2019 was P160.
The net income for 2019 was P6,000,000.
A. 17.14
B. 16.67
C. 18.75
D. 17.39
Answer: A. 17.14
Theoretical Value of Rights

Value of one rights = Market value of share right on – subscription price
Number of rights to purchase one share + 1
Applying the formula for the theoretical value of rights is
= 160-100 / 5+1
=60/6
=P10 per right
Market value of shares-right on 160
Theoretical Value of rights 10
Market value of share ex-right. 150
Adjustment factor 160/150
The number of ordinary shares outstanding prior to the exercise of the rights is multiplied by an
adjustment factor whose numerator is the market value of the share rights-on and the denominator is
the market value of the shares ex-right.
Ordinary shares- January 1
Ordinary shares issued thru exercise of rights on March 31, 2019 (300,000 /5)
Total ordinary shares on March 31 300,000
60,000
360,000
January 1 300,000 x 160/150 x 3/12 80,000
March 31 300,000 x 9/12 270,000
Average number of shares 350,000

Basic EPS ( 6,000,000 / 350,000) P17.14
PROBLEM 31-9 (Application Guidance PAS 33)

On January 1, 2019, Excel Company had 600,000 ordinary shares outstanding.
During 2019, the entity issued rights to acquire one ordinary share at P10 in the ratio of one new share
for every 4 shares outstanding
The rights are exercised on October 1, 2019. The market value of the ordinary share immediately prior
to the rights issue is P35.
The net income for the year is P8,550,000.
A. 11.40
B. 12.00
C. 14.25
D. 13.41
Answer: B. 12.00
Applying the formula for the theoretical value of rights is
= 35-10 / 4+1
=25/5
=P5 per right
Market value of shares-right on 35
Theoretical Value of rights 5
Market value of share ex-right. 30
Adjustment factor 35/30
Ordinary shares- January 1
Ordinary shares issued thru exercise of rights on October 1, 2019 (600,000 /4)
Total ordinary shares on October 1 600,000
150,000
750,000
January 1 600,000 x 35/30 x 9/12 525,000
March 31 750,000 x 3/12 187,500
Basic EPS ( 8,550,000 / 712,500) P12.00
PROBLEM 31-10 (IAA)
During the current year, Innova Company had outstanding 200,000 ordinary shares and 20,000
cumulative preference shares with a P10 par share dividend.
The entity had a P3,000,000 net loss for the year. No dividends were declared or paid.
What amount should be reported as basic loss per share?
A. 15.00
B. 16.00
C. 10.00
D. 10.67
Answer: B. 16.00
Net loss
Preference dividend (20,000 x 10)
Total loss to ordinary shares
BASIC LOSS PER SHARE (3,200,000/ 200,000)
3,000,000
200,000
3,200,000
P16.00
The annual preference dividend is added to the net loss to get the total loss attributable to the ordinary
shares.
CHAPTER 32
Basic EARNINGS PER SHARE
Average shares
Jet Company provided the ff. information for the current year:
January 1 Shares outstanding 200,000
April 1 2-for-1 share split 200,000
July 1 Shares issued 100,000
What is the average number of shares?
A. 400,000
B. 450,000
C. 500,000
D. 540,000
Answer: B. 450,000
January 1 200,000 x 2 x 12/12 400,000
July 1 100,000 x 6/12 50,000
450,000
The share split is recognized retroactively, meaning, it is treated as a change from the date of original
shares are issued.
Thus, the balance of 200,000 shares on January 1 would become 400,000 as a result of a 2-for-1 share
split.
Timp Company had the ff. transactions during the year:
January 1 Ordinary shares outstanding 300,000
February 1 Issued a 10% share dividend 30,000
March 1 Issued ordinary shares in a business combination 90,000

July 1 Issued ordinary shares for cash 80,000
December 1 Ordinary shares outstanding 500,000
What is the weighted average number of shares outstanding?
A. 400,000
B. 442,000
C. 445,000
D. 460,000
Answer: C. 445,000
January 1 300,000x 1.10 x 12/12 330,000
March 1 90,000 x 10/12 75,000
July 1 80,000 x 6/12 40,000
The share dividend is treated as a change from the date of original shares are issued.
Thus, the balance of 300,000 on January 1 would become 330,000 shares.

PROBLEM 32-3 (IAA)
Sharon Company provided the ff. information in relation to share capital for the current year:
January 1 Shares outstanding 1,250,000
April 1 Shares issued 200,000
October 1 Treasury shares purchased 100,000
December 1 Issued a 100% share dividend
What is the amount of weighted average shares?
A. 2,700,000
B. 2,775,000
C. 2,750,000
D. 1,350,000
Answer: C. 2,750,000
January 1 1,250,000 x 200% 2,500,000
April 1 200,000 x 200% x 9/12 300,000
October 1 100,000 x 200% x 3/12 (50,000)
Average number of shares 2,750,000
PROBLEM 32-4 (IAA)
At the beginning of the current year, Nissan Company had 200,000 ordinary shares outstanding. During
the current year, the following events occured:
March 1 2-for-1 share split
June 1 Issued 30,000 additional shares
September 1 20% share dividend
What is the weighted average number of shares outstanding?

A. 276,000
B. 261,000
C. 230,000
D. 256,000
Answer: B. 261,000
January 1 100,000 x 2 x 1.20 x 12/12 240,000
June 1 30,000 x 1.20 x 7/12 21,000
PROBLEM 32-5 (IAA)
Shane Company had 100,000 ordinary shares issued and outstanding at the beginning of the year.
During the current year, the entity had the ff. ordinary shares transactions:
April 1 Issued 30,000 previously unissued shares
May 1 Split the share 2 for 1
June 30 Purchased 10,000 shares for the treasury
July 31 Distributed a 20% share dividend
December 31 Split the share 3 for 1
What is the weighted average number of shares that should be used in calculating earnings per share?
A. 288,000
B. 864,000
C. 882,000
D. 972,000
Answer: B. 864,000
January 1 100,000 x 2 x 1.20 x 3 x 12/12 720,000
April 1 30,000 x 2 x 1.20 x 3 x 9/12 162,000
June 30 10,000 x 1.20 x 3 x 6/12 (18,000)
864,000
The January 1 balance is adjusted for the 2 for 1 split, 20% share dividend and 3 for 1 split.
The April 1 issue is adjusted for 2 for 1 split, 20% share dividend and 3 for 1 share split.
The June 30 treasury shares are adjusted for the 20% share dividend and 3 for 1 share split.
PROBLEM 32-6 (IAA)
Helen Company provided the ff. share transactions for the current year:
January 1 Shares outstanding 44,000
February 1 Issued for cash 56,000
May 1 Acquired treasury shares 25,000
August 1 25% share dividend
September 1 Resold treasury shares 10,000
November 1 Issued 3 for 1 share split
What is the weighted average number of shares for EPS computation?
A. 305,000
B. 307,500
C. 103,750
D. 311,250
Answer: A. 305,000
January 1 44,000 x 1.25 x 3 x 12/12 165,000
February 1 56,000 x 1.25 x 3 x 11/12 192,500
May 1 25,000 x 1.25 x 3 x 8/12 (62,500)
September 1 10,000 x 3 x 4/12 10,000
305,000
The January 1 balance is adjusted for the 25% share dividend and 3 for 1 split.
The February 1 issue is adjusted for 2 for 25% share dividend and 3 for 1 share split.
The May 1 treasury shares are adjusted for the 25% share dividend and 3 for 1 share split.
The September 1 resold of treasury is adjusted for the 3 for 1 split.
PROBLEM 32-7 (IAA)
Wisconsin Company had 250,000 ordinary shares outstanding on January 1, 2019.
During 2019 and 2020, the ff. transactions took place:
2019 March 1 Sold 24,000 shares
July 1 Issued a 20% share dividend
October 1 Sold 16,000 shares
December 1 Purchased 15,000 shares to be held in treasury
2020 June 1 3 for 1 share split

September 1 Sold 60,000 shares
1. What is the weighted average number of shares for 2019 to be used in the earnings per share
computation for comparative financial statements of 2020?
A. 980,250
B. 329,800
C. 984,000
D. 969,000
2. What is the weighted average number of shares for 2020 to be used in the earnings per share
computation for comparative financial statements of 2020?
A. 1,009,400
B. 1,049,400
C. 1,169,400
D. 989,400
Answer for no. 1- A. 980,250
2019
January 1 250,000 x 1.2 x 3 x 12/12 900,000
March 1 24,000 x 1.2 x 3 x 10/12 72,000
October 1 16,000 x 1.2 x 3/12 12,000
December 1 15,000 x 1.2 x 1/12 (3,750)
980,250
January 1, 2019 250,000
March 1, 2019 24,000
July 1, 2019 (20% x 274,000) 54,800

October 1, 2019 16,000
December 1, 2019 (15,000)
Outstanding shares-December 31, 2019 329,800
Answer for no. 2- A. 1,009,400
2020
January 1 329,800 x 3 x 12/12 989,400
September 1 60,000 x 4/12 20,000
1,009,400
PROBLEM 32-8
Precise Company had a net income of P15,000,000 for the current year. The ff. appropriations have not
been considered in this amount:
Arrears of cumulative preference divided by 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 shares of P1 par value outstanding at the beginning of the year. The
ff. share transactions occured during the current year:
January 1 Issued at P5 per share, P1 paid to date and entitled to participate in dividends to the
extent paid up 250,000
April 1 Full market price P3 per share issue 600,000
July 1 Purchase of own shares 400,000
A. 4.85
B. 4.57
C. 3.64
D. 3.94
Answer: A. 4.85
Net income per book 15,000,000
Exceptional profit 4,000,000
Adjusted net income 19,000,000
Preference dividend for the current year (4M/2) (2,000,000)
Preference share premium payable on redemption (1,000,000)
The preference share premium payable on redemption can be considered as dividend on participating
preference share.
January 1 3,000,000 x 12/12 3,000,000
January 1 250,000 x 1/5 x 12/12 50,000
April 1 600,000 x 9/12 450,000
July 1 400,000 x 6/12 (200,000)
Average shares 3,300,000
BASIC EARNINGS PER SHARE 4.85
(16,000,000/3,300,000)
Strauch Company had one class of ordinary share capital outstanding and no other securities that are
potentially convertible into ordinary shares. During 2019, 100,000 shares were outstanding.
In 2020, two distributions of additional ordinary shares occured:
April 1- 20,000 treasury shares were sold
July 1- A 2-for-1 share split was issued
The net income for 2020 was P4,485,000 and the net income for 2019 was P3,500,000.
1. What amount should be reported as basic earnings per share for 2020 in the comparative income
statement for 2020?
A. 20.50
B. 19.50
C. 22.42
D. 18.69
2. What amount should be reported as basic earnings per share for 2019 in the comparative income
statement for 2020?
A. 35.00
B. 17.50
C. 15.22
D. 14.28
Answer for no.1- B. 19.50
January 1, 2020 200,000 x 12/12 200,000
April 1, 2020 20,000 x 2 x 9/12 30,000
Average Shares 230,000
2020 Basic Earnings Per Share (4,485,000/230,000) 19.50
Answer for no.2- B.17.50
Dec 31, 2019 Balance100,000
July 1, 2020 2-for-1 share split 100,000
Total ordinary shares-Dec.31,2019 200,000
2019 Basic Earnings Per Share(3,500,000/200,000) 17.50
PROBLEM 32-10 (IAA)
On January 1, 2019, Shane Company had 100,000 ordinary shares outstanding.
The ff. transactions occured during 2019:
March 1 Reacquired 30,000 shares accounted for as treasury
Sept. 1 Sold all treasury shares
Dec. 1 Sold 66,000 new shares for cash

Dec. 31 Reported a net income of P2,600,000
The ff. transactions occured during 2020
Jan. 15 Declared and issued a 25% share dividend
Dec. 31 Reported a net income of P4,000,000
1. What amount should be reported as basic earnings per share for 2019 for presentation in
comparative financial statements on December 31, 2020?
A. 15.88
B. 20.00
C. 20.80
D. 19.90
2. What amount should be reported as basic earnings per share for 2020 for presentation in
comparative financial statements on December 31, 2020?
A. 24.10
B. 19.28
C. 30.77
D. 32.00
Answer for No.1- B.20.00
2019
Jan. 1 100,000 x 1.25 x 12/12 125,000
March 1 3,000 x 1.25 x 10/12 (3,125)
Sept.1 3,000 x 1.25 x 4/12 1,250
Dec. 1 66,000 x 1.25 x 1/12 6,875
Average shares outstanding 130,000
2019 Basic Earnings Per Share(2,600,000/130,000) 20.00

Answer for no.2- B.19.28
2020
Jan. 1 Outstanding 100,000
March 1 Treasury shares purchased (3,000)
Sept. 1 Resale of treasury shares 3,000
Dec. 1 New issue 66,000
Ordinary shares-Dec.31,2019 166,000
Average share outstanding for 2020(166,000 x 1.25) 207,500
2020 Basic Earnings Per Share (4,000,000/207,500) 19.28
The 25% share dividend declared and issued on January 15, 2020 should be treated retroactively.
CHAPTER 33
DILUTED EARNINGS PER SHARE
Convertible Preference Shares
Convertible Bonds Payable
Dunn Company had 200,000 ordinary shares of P20 par value and 20,000 shares of P100 par, 6%
cumulative, convertible preference share capital outstanding for the entire current year. Each
preference share is convertible into 5 ordinary shares.
The net income for the current year was P840,000.
What amount should be reported as diluted earnings per share?
A. 2.40
B. 2.80
C. 3.60
D. 4.20
Answer: B. 2.80
Ordinary share outstanding 200,000
Potential ordinary shares to be issued for conversion of preference shares (20,000 x 5) 100,000
Diluted Earnings Per Share (840,000/300,000) 2.80
Under diluted EPS, the annual dividend on the convertible preference share is no longer deducted from
net income because it is assumed that the preference share is already converted into ordinary shares.
Cox Company had 1,200,000 ordinary shares outstanding on January 1 and December 31, 2019.
In connection with the acquisition of a subsidiary in previous year, the entity is required to issue 50,000
additional ordinary shares on July 1, 2020 to the former owners of the subsidiary.
The entity paid P200,000 annual preference dividend in 2019 and reported a net income of P3,400,000
for the current year.
The preference share capital is noncumulative and nonconvertible.
What amount should be reported as diluted earnings per share?
A. 2.83
B. 2.72
C. 2.67
D. 2.56
Answer: D. 2.56
Ordinary shares outstanding 1,200,000

Potential ordinary shares to be issued in the acquisition of subsidiary 50,000
Total ordinary shares 1,250,000
Preference dividend (200,000)
Diluted EPS (3,200,000/1,250,000) 2.56
Note that the preference share is nonconvertible and therefore not a potential ordinary share.
Thus, the preference dividend paid is deducted from net income.
Petrock provide the ff. information at year-end:
2018 2019
Original share capital 90,000 90,000
Convertible preference share capital 10,000 10,000
During 2019, Petrock Company paid dividends of P1.00 per ordinary share and P2.40 for preference
share.
The preference share capital is convertible into 20,000 ordinary shares. The net income for 2019 was
P285,000. The income tax rate is 30%.
1. What amount should be reported as basic earnings per share?
A. 3.17
B. 2.90
C. 3.43
D. 2.85
2. What amount should be reported as diluted earnings per share?
A. 2.53
B. 2.61
C. 2.90
D. 2.51
Answer to no.1- B.2.90
Net income 285,000
Preference dividend (10,000 x 2.40) (24,000)
Net income-ordinary 261,000
Basic Earnings Per Share (261,000/90,000) 2.90
Answer to no.2- D.2.51
Ordinary share outstanding 90,000
Potential ordinary shares-convertible preference 20,000
Diluted EPS (285,000/110,000) 2.51
PROBLEM 33-4 (IAA)
At the beginning of the current year, Vios Company had 100,000 ordinary share outstanding.
In addition, the entity had issue 100,000 conertible cumulative 5% preference share with P100 par at the
beginning of the current year. These preference shares were converted on Sept 1.
Each preference share was converted into 6 ordinary shares.
The preference dividends for the entire year were paid in full before the conversion.
The entity has no other potentially dilutive securities. Net income for the current year was P2,000,000.
1. What amount should be reported as basic earnings per share?
A. 16.25
B. 16.67
C. 20.00
D. 19.50
2. What amount should be reported as diluted earnings per share?
A. 12.50
B. 12.19
C. 16.25
D. 19.50
Answer for no.1- A.16.25
January 1 Outstanding 100,000
September 1 Conversion (10,000 x 6 x 4/12) 20,000
Average share outstanding 120,000
Preference dividend (1,000,000 x 5%) (50,000)
Basic Earnings Per Share (1,950,000/120,000) 16.25
Answer to no.2- A.12.50

January 1 Outstanding 100,000
September 1 Conversion (10,000 x 6) 60,000
Diluted EPS (2,000,000 / 160,000) 12.50

Sasger

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Sasger

Uploaded by

Copyright:

Available Formats

Sasger

zCourse Hero Logo

Search course documents, questions, and more

Michigan State UniversityACCOUNTINGACCOUNTING 201CAT CUP 1 - DIFFICULT - CAT CUP ONE

CAT CUP 1 - DIFFICULT - CAT CUP ONE DIFFICULT ROUND...

Michigan State University

This preview shows page 1 - 3 out of 4 pages.

Search this document

CAT CUP ONEDIFFICULT ROUNDDIFFICULT 1.JM Company is contemplating on the appropriate

Get answer to your question and much more

DIFFICULT 3.The following information was provided to you by Willow CompanyBookvalueTax

Get answer to your question and much more

11THREGIONAL MID YEAR CONVENTION

Related Textbook Solutions

CAT CUP ONEDIFFICULT ROUND

Upload your study docs or become a

Course Hero member to access this document

Upload your study docs or become a

Course Hero member to access this document

End of preview. Want to read all 4 pages?

Upload your study docs or become a

Course Hero member to access this document

Email IconURL Icon

Students also studied

ADVANCED FINANCIAL ACCOUNTING1.docx

Practical accounting 06.docx

CAT CUP 1 - AVERAGE

4 QUIZ PROPERTY, PLANT AND EQUIPMENT 1.1.docx

Trending in ACCOUNTING 201

Auditing Theory CPAR Testbank

Business and Transfer Tax CPAR

Reviewers for DEDUCTIONS (Taxation).docx

CAT CUP 1 - DIFFICULT

CAT CUP 1 - DIFFICULT

Interested in CAT CUP 1 - DIFFICULT?

Bookmark it to view later.

Other Related Materials

CEL 1 PRAC 1 Answer Key

CEL 1 PRAC 1 Answer Key

PRIA FAR 1810 Part 1 Problem-Solving (108).pdf

4 QUIZ PROPERTY, PLANT AND EQUIPMENT 1.1.docx

Newly uploaded documents

Kami Export - Ramon Silveira Mattos - Interference of Waves Ex.pdf

ISABELLA ALFORD - Keystone Species and Trophic Cascades.pdf

A fourth factor affecting exchange rates is government controls The governments

IKEA Case Study Done-3.docx

The statement refers to periodic stocktaking In continuous stocktaking a

Outline Review_Team Theta_V4.docx

week 8 final paper.docx

Left Quote Icon

Left Quote Icon

Get Course Hero

Campus Rep Program

Our Honor Code

SSL site seal

Better Business Bureau accredited business

Copyright © 2022. Course Hero, Inc.

Course Hero is not sponsored or endorsed by any college or university.

PAS 33- EARNINGS PER SHARE

BASIC EARNINGS PER SHARE

PROBLEM 31-1 (AICPA Adapted)

Preference share capital (10,000 x P100) 1,000,000

Net income. 900,000

Preference dividends (1,000,000 x 5%) (50,000)