Problem 1

Sarah Company had 100,000 ordinary shares issued and outstanding at the beginning of the year. During the current year, the entity had the following ordinary share 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

Dec 31: Split the share 3 for 1

Required: Compute for the weighted average number of shares that should be used in calculating earnings per share.

Problem 2

The following pertain to the capital structure of Chloe Company on January 1: Ordinary shares issued and outstanding 200,000 shares Preference share capital issued and outstanding 50,000 shares On October 1, the entity issued a 10% share dividend on ordinary shares and declared the annual cash dividend of P200,000 on preference shares. The preference shares are noncumulative, non-participating and non-convertible. Net income for the year ended December 31 was P1,920,000.

Required: Compute for the basic earnings per share.

Problem 3

Sario Company reported 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 and ordinary dividend of P400,000 and a preference dividend of P500,000 on the preference shares. The entity had P1,000,000 of P5 par value ordinary shares in issue.

Required: Compute for the basic earnings per shares assuming the preference share is:

a. Redeemable

b. non-redeemable

Problem 4

During the current year, Iysha Company had outstanding 200,000 ordinary shares and 20,000 cumulative preference shares with a P10 per share dividend. Each preference share in convertible into five ordinary shares. The entity had a P3,000,000 net loss for the year. No dividends were paid or declared.

Required: Compute for the amount of the basic loss per shares that should be reported at year-end.