Computer, Inc. had 300,000 f ordinary shares and outstanding at December 31, 2019. On

July 1, 2020, an additional 50,000 shares of ordinary were issued for cash. Computer also

had unexercised stock options to purchase 40,000 shares of ordinary at P15 per shares

outstanding at the beginning and end of 2020. The average market price of Computer's

ordinary was P20 during 2020.

What is the number of shares that should be used in computing diluted earnings per share?

a. 325,000

b. 335,000

c. 360,000

d. 365,000

At December 31, 2020, Professor Company had 450,000 shares of ordinary shares

outstanding. On September 1, 2020, an additional 150,000 shares of ordinary shares were

issued. In addition, Professor had P10,000,000 of 6% convertible bonds outstanding at

December 31, 2019 which are convertible into 300,000 shares of ordinary shares. The

carrying value of the bonds as of December 31, 2019 and based on a rate of 8% is

P9,205,800. No bonds were converted into ordinary shares in 2020. The net income for the

year ended December 31, 2020 was P3,750,000.

Assuming the income tax rate was 32%, what should be the diluted earnings per share for the

year ended December 31, 2020 of Professor Company?

a. P5.20

b. P5.31

c. P5.44

d. P7.50

On December 31, 2020, Raven Company has a 200,000 ordinary shares outstanding with a

par value of P100 per share. Information revealed that Raven had an 9% convertible

debenture, P1,000,000 face value bonds. The bond has a carrying value of P1,067,830 as of

January 2, 2020 based on a prevailing rate of 7%. Each 1,000 bond is convertible into 20

ordinary shares. The bonds were dated January 1, 2020. Net income after tax of 32% for

2020 was P418,000.

How much should Raven Company report as earnings per share in its December 31, 2020

financial statements?

a. P1.90

b. P2.09

c. P2.13

d. P2.89

On December 31, 2019, Reload Company had 200,000 ordinary shares outstanding with a

par value of P100 per share. In addition, the company had 40,000 shares of 10% convertible

preference shares with a par value of P50 per share. The preference shares are convertible

into 40,000 ordinary shares. On December 31, 2020, Reload Company reported an after tax

income of P800,000 and paid P200,000 and P250,000 dividends to preference and ordinary,

respectively.

What amounts of earnings per share Reload Company should report in its December 31,

2020 financial statements?

a. Basic Earnings per Share (BEPS) of P3.00 only.

b. Basic Earnings per Share of P4.00 only.

c. Basic Earnings per Share of P3.00 & Diluted Earnings per Share (DEPS) of P3.33.

d. Basic Earnings per Share of P4.00 & Diluted Earnings per Share (DEPS) of P3.33.

At December 31, 2019, Cabinet Company had 2,000,000 shares of ordinary shares standing.

On January 1, 2020, Cabinet issued 500,000 shares of preference, which were convertible

into 1,000,000 shares of ordinary shares. During 2020, Cabinet declared and paid P1,500,000

cash dividends on the ordinary shares and P500,000 cash dividends on the preference shares.

Net income for the year ended December 31, 2020 was P5,000,000.

Assuming an income tax rate of 32%, how much is the diluted earnings per share for the year

ended December 31, 2020?

a. P1.50

b. P1.67

c. P2.08

d. P2.50

Night Company had 500,000 ordinary shares issued and outstanding at December 31, 2019.

During 2020, no additional ordinary share was issued. On January 1, 2020, Night issued

400,000 nonconvertible preference shares.

During 2020, Night declared and paid P180,000 cash dividends on the ordinary shares and

P150,000 on the nonconvertible preference shares. Net income for the year ended December

31, 2020 was P960,000.

What should be the 2020 earnings per ordinary share of Night Company?

a. P0.90

b. P1.26

c. P1.62

d. P1.92

The following share capital transactions pertain to Karma Corporation for the year 2020:

January 1 Shares outstanding 44,000

February 1 Shares issued for cash 56,000

May 1 Shares reacquired 25,000

August 1 Receipt of 25% stock dividends

September 1 Resold part of treasury share 10,000

November 1 Issued 2-for-1 stock split

What is the weighted average ordinary share outstanding?

a. 187,500

b. 203,333

c. 207,500

d. 250,000

Temper, Inc. had the following transactions pertaining to ordinary shares during 2020:

January 1 ordinary shares outstanding 30,000

February 1 issued 10% ordinary share dividend 3,000

March 1 issued for cash 9,000

July 1 issued for cash 8,000

TOTAL December 31 50,000

What should be Temper's 2020 weighted average shares outstanding?

a. 40,000

b. 44,250

c. 44,500

d. 46,000

On September 1, 2020, Windburn began a service proprietorship with an initial investment of

P400,000. Windburn provided P800,000 of services during September. Collections were

made except for P200,000 which were paid the following month. Expenses were incurred in

the amount of P400,000 including P100,000 which are to be paid next month. Windburn

withdraw P60,000 against the capital account.

In September 30, 2020 financial statement, what amount of capital should be reported under

the cash basis accounting?

a. 640,000

b. 740,000

c. 800,000

d. 840,000

Liquid Company reported revenue of P1,980,000 in its income statement for the year ended

December 31, 2020. Additional information were as follows:

December 31, 2019 December 31, 2020

Accounts receivable P415,000 P550,000

Allowance from doubtful accounts 25,000 40,000

No uncollectible accounts were written off during 2020. Had the cash basis of accounting

been used instead, how much would have been reported as receipts for 2020 by Liquid

Company?

a. 1,845,000

b. 1,860,000

c. 1,885,000

d. 2,115,000