Solution manual financial accounting by valix ch10 11

173
CHAPTER 10
Problem 10-1
Book value per share (8,800,000 / 50,000)

176

Problem 10-2
Excess
Ordinary
a. Balances
12% x 1,000,000 x 2
12% x 4,000,000
480,000
Balance for participation

3,000,000 1,000,000 4,000,000
(
240,000)
240,000
( 480,000)
2,280,000

Total
Divide by shares outstanding
40,000
Book value per share
157.60
b. Balances
12% x 1,000,000 x 2
15% x 4,000,000

600,000
Balance for participation

4% x 1,000,000
2,240,000
Total
Divide by shares

456,000

1,824,000

1,696,000 6,304,000
10,000
169.60
3,000,000 1,000,000 4,000,000
(
240,000)
240,000
( 600,000)
2,160,000

Total
Divide by shares
Book value per share
158.20
c. Balances
12% x 1,000,000 x 2
12% x 4,000,000
480,000

Balance for participation

Preference

432,000

1,728,000

1,672,000 6,328,000
10,000
40,000
167.20
3,000,000 1,000,000 4,000,000
(
240,000)
240,000
( 480,000)
2,280,000
40,000
1,280,000
10,000

6,720,000
40,000


Book value per share
168

128

174
Excess
Ordinary
d. Balances
12% x 1,000,000 x 2
To ordinary
2,760,000

3,000,000 1,000,000 4,000,000
(
240,000)
240,000
2,760,000 _________

Total
Divide by shares
Book value per share
169
e. Balances
12% x 1,000,000
To ordinary
2,880,000

Preference

1,240,000 6,760,000
10,000
40,000
124

3,000,000 1,000,000 4,000,000
(
120,000)
120,000
2,880,000 _________

Total
Divide by shares
Book value per share
172

1,120,000 6,880,000
10,000
40,000
112

Problem 10-3
Excess
Ordinary
a. Balances
4,000,000
12% x 2,000,000 x 3
To ordinary
(1,620,000)
Total
Divide by shares

( 900,000)

Preference

2,000,000

(
720,000)
(1,620,000)

720,000
_________

2,720,000
40,000

2,380,000
40,000


Book value per share
59.50

68

b. Balances
4,000,000
Prorata sharing
( 600,000)

( 900,000)
900,000

Total

Divide by shares
Book value per share

2,000,000
( 300,000)
1,700,000 3,400,000
40,000
40,000
42.50

85

175
Problem 10-4
Excess
Ordinary
Balances
Liquidation premium (40,000 x 3)
Preference dividend (12% x 2,000,000)
To ordinary
Total
Divide by shares
Book value per share
86.40

Preference

4,000,000 2,000,000 5,000,000
( 120,000)
120,000

( 240,000)
240,000
3,640,000 _________
3,640,000
2,360,000 8,640,000
40,000
100,000
59

In the absence of a contrary statement, the preference share is noncumulative
and nonparticipating.
Problem 10-5
6% Preference dividends (6% x 3,000,000 x 3 years)
540,000
8% Preference dividends (8% x 2,000,000)
160,000
Total preference dividends
700,000
Excess

6%

8%


over par
Ordinary
Preference as to assets:
Balances
5,000,000

Preference dividends
Balance to ordinary
( 170,000)

530,000

Preference
3,000,000

(700,000)
(170,000)

Total
4,830,000
Divide by shares outstanding
50,000
Book value per share
96.60

540,000
_________

Preference
2,000,000
160,000
_________

3,540,000

2,160,000

30,000

20,000

118

Preference as to dividends:
Balances
5,000,000
Prior years’ preference dividends
(6% x 3,000,000 x 2 years)
Balance

530,000

3,000,000

360,000
170,000

6% Preference (180,000 / 340,000 x 170,000)
8% Preference (160,000 / 340,000 x 170,000)
______
Total
5,000,000
Divide by shares outstanding
50,000
Book value per share
100

108

2,000,000

360,000
90,000
_________

80,000

3,450,000

2,080,000

30,000

20,000

115

__

104

176
Problem 10-6
Preference
Shares Amount
Amount

Issued
3,000,000
Add: Subscribed
500,000
Total
3,500,000
Less: Treasury
100,000
Issued and outstanding
3,400,000

Ordinary
Shares

15,000

1,500,000

30,000

2,000

200,000

5,000

17,000

1,700,000

35,000

1,000

100,000

1,000

16,000

1,600,000

34,000


1. Preference share capital
Share premium
Treasury preference share

100,000
10,000

2. Ordinary share capital
Treasury ordinary share
Share premium

100,000

110,000
70,000

30,000

Share premium (300,000 – 10,000 + 30,000)
Retained earnings unrestricted
Retained earnings appropriated
680,000
Total excess over par
1,968,000

320,000
968,000

Excess
Ordinary
Balances
3,400,000
12% x 1,600,000 x 5
12% x 3,400,000
408,000
Balance for participation

1,968,000

Preference
1,600,000

(
960,000)
( 408,000)

960,000

600,000

16 / 50 x 600,000
34 / 50 x 600,000
408,000
Total
4,216,000
Divide by shares outstanding
34,000
Book value per share
124

192,000
_________
2,752,000
16,000
172

Problem 10-7
Total shareholders’ equity
Less: Preference shareholders’ equity:
Preference share capital
Preference dividends (8% x 1,000,000 x 2)
1,160,000
Ordinary shareholders’ equity
2,660,000

3,820,000

1,000,000
160,000

177


Book value per share:
Preference (1,160,000 / 10,000 shares)
116
Ordinary (2,660,000 / 20,000 shares)
133
Ordinary shares issued
Less: Treasury shares
2,000
Outstanding ordinary shares

22,000
20,000

Problem 10-8
Ordinary issued
2,000,000
Subscribed
Total
Less: Treasury
500,000
Outstanding

Shares
20,000

Amount

10,000
30,000
5,000

1,000,000
3,000,000

25,000

2,500,000

Share premium (300,000 + 100,000 gain on treasury share)
400,000
Retained earnings
Total excess
Excess
Ordinary
Balances
2,500,000
12% x 1,500,000 x 3
12% x 2,500,000
300,000
Balance for participation
15 / 40 x 1,600,000
25 / 40 x 1,600,000
1,000,000
Total

3,800,000
Divide by shares outstanding
25,000
Book value per share
152

2,440,000

2,040,000
2,440,000

Preference
1,500,000

(
540,000)
( 300,000)

540,000

1,600,000
600,000
_________
2,640,000
15,000
176


Problem 10-9
1. Annual preference dividend (12% x 2,000,000)

240,000
Paid in 2007
Balance in 2007
40,000
Dividend in 2008
240,000
Total preference dividends in 2008
280,000

200,000

178
2. Total dividends paid in 2008
Less: Preference dividends paid in 2008
280,000
Ordinary dividends
320,000

600,000

Problem 18-10
1. Net income 2007 and 2008
1,610,000
Net loss 2004, 2005 and 2006
( 600,000)
Retained earnings – maximum dividend
1,010,000
2.
Balance
10% x 500,000

12% x 1,000,000 x 5
10% x 1,500,000
150,000
Balance
5 / 30 x 210,000
10 / 30 x 210,000
15 / 30 x 210,000
105,000
Total dividends
255,000

Retained
10%
12%
earnings
Preference
Preference Ordinary
1,010,000
(
50,000)
50,000
( 600,000)
600,000
( 150,000)
210,000
35,000
______
85,000

70,000

_______
670,000


Problem 10-11
Preference dividend (15% x 2,500,000)
375,000
Ordinary dividend (200,000 x 5)
1,000,000
Maximum dividend

1,375,000

Problem 10-12 Answer D
Total shareholders’ equity
Preference shareholders’ equity:
Preference share capital
Preference dividends in arrears
Liquidation premium
3,250,000
Ordinary shareholders’ equity
7,000,000
Divide by ordinary shares outstanding
100,000
Book value per ordinary share

10,025,000
2,500,000
250,000
500,000

70.00

179
Problem 10-13 Answer B
Total shareholders’ equity
Preference shareholders’ equity:
Preference share capital
Preference dividends for 2000 (1,000,000 x 8%)
Liquidation premium (20,000 x 5)
1,180,000
Ordinary shareholders’ equity
2,720,000
Divide by ordinary shares outstanding
100,000
Book value per ordinary share

3,900,000
1,000,000
80,000
100,000

27.20

Problem 10-14 Answer B
Total shareholders’ equity
Preference shareholders’ equity:
Preference share capital
Liquidation premium (10,000 x 5)
1,050,000

4,950,000
1,000,000
50,000


Ordinary shareholders’ equity
3,900,000
Divide by ordinary shares outstanding
30,000
Book value per ordinary share

130

Problem 10-15 Answer A
Total shareholders’ equity
Preference shareholders’ equity:
Preference share capital
Preference dividend (500,000 x 8%)
540,000
Ordinary shareholders’ equity
1,068,000
Divide by ordinary shares
89,000
Book value per ordinary share

1,608,000
500,000
40,000

12

Ordinary shares issued
Less: Treasury shares
1,000
Outstanding

90,000
89,000

Problem 10-16 Answer B
Total dividend declared in 2008
Preference dividends:
In arrears on December 31, 2007
2008 (6% x 4,000,000)
360,000
Balance to ordinary share

440,000
120,000
240,000
80,000

180
Problem 10-17 Answer D
Preference share capital (30,000 x 100)
3,000,000
Preference dividend in 2007 (3,000,000 x 5%)
150,000
Preference dividend in 2008

Total preference dividends
300,000
Less: Preference dividend paid in 2008

150,000
100,000


Preference dividends in arrears – December 31, 2008
200,000
A dividend is not a liability until it is legally declared. Accordingly, the
preference dividends in arrears of P200,000 on December 31, 2008 shall be
disclosed only.
Problem 10-18 Answer C
Dividend
Ordinary
Balance
10% x 3,000,000
10% x 2,000,000
200,000
Balance for participation

1,000,000
( 300,000)
( 200,000)

Preference
300,000

500,000

3,000,000 / 5,000,000 x 500,000
2,000,000 / 5,000,000 x 500,000
200,000

300,000
_______
600,000

400,000

Problem 10-19 Answer C
Total shareholders’ equity
Preference shareholders’ equity:
Preference share capital (500 x P1,000)
Liquidation premium (500 x P400)
700,000
Ordinary shareholders’ equity
2,900,000
Divide by ordinary shares
Book value per ordinary share

3,600,000
500,000
200,000

5,000
580

181

Problem 10-20 Answer A
Preference share capital

1,000,000


Ordinary share capital
Retained earnings – 2008 net income
6,000,000
Total shareholders’ equity
Preference shareholders’ equity:
Preference share capital
Preference dividend (1,000,000 x 10%)
Liquidation premium (100,000 x 2)
1,300,000
Ordinary shareholders’ equity
8,700,000
Divide by ordinary shares
Book value per ordinary share

3,000,000
10,000,000
1,000,000
100,000
200,000

30,000
290

Problem 10-21 Answer A

Preference share capital
1,000,000
Liquidation premium – excess of liquidating value over par (20,000 x 5)
100,000
Preference dividend for current year only (1,000,000 x 12%)
120,000
Total preference shareholders’ equity
1,220,000
Divide by preference shares outstanding
20,000
Book value per preference share
61
Problem 10-22 Answer A
Excess
Ordinary
Balances
5,000,000
12% x 2,000,000 x 3
14% x 3,000,000 x 1
12% x 5,000,000 x 1
600,000
Balance – prorata
1,000,000
Total
Divide by shares outstanding
50,000
Book value per share
132

12% PS

3,740,000

2,000,000

( 720,000)
( 420,000)
( 600,000)
2,000,000

14% PS
3,000,000

720,000
420,000
400,000

600,000

3,120,000 4,020,000 6,600,000
20,000
10,000
156

420

The “excess” is the sum of the retained earnings and share premium.


Share capital

Allocation
12% Preference share
400,000
14% Preference share
600,000
Ordinary share
1,000,000

Fraction

2,000,000

2/10

3,000,000

3/10

5,000,000

5/10

10,000,000
2,000,000

182
Problem 10-23 Answer C
Preference share capital
Ordinary share capital
Subscribed ordinary share capital

Share premium
Retained earnings
Treasury shares
800,000)
Total equity
Preference shareholders’ equity:
Preference share capital
Preference dividend for 2006, 2007, 2008
(2,000,000 x 10% x 3)
2,600,000
Ordinary shareholders’ equity
8,000,000

2,000,000
4,000,000
2,000,000
1,000,000
2,400,000
(
10,600,000
2,000,000
600,000

For book value purposes, the subscription receivable is not deducted from
subscribed share capital in determining the total shareholders’ equity.
Ordinary shares issued
Ordinary shares subscribed
20,000
Total
Treasury shares

Ordinary shares outstanding

40,000
60,000
(10,000)
50,000

Book value per ordinary share (8,000,000 / 50,000)
160
Problem 10-24 Answer C
Dividends
Ordinary
Amount

900,000

Preference


6% x 1,000,000 x 3
6% x 4,000,000
240,000
Balance prorata

(180,000)
(240,000)

180,000

480,000

1/5 x 480,000
4/5 x 480,000
384,000
Total dividends
624,000

96,000
_______
276,000

Problem 10-25 Answer B
Total income 2007 and 2008
Total loss 2004, 2005 and 2006
(3,000,000)
Retained earnings – maximum dividend
5,000,000

8,000,000

183
Retained
earnings
Ordinary
Dividend
12% x 1,000,000
10% x 2,500,000 x 5
10% x 7,500,000
750,000
Balance for participation

2,160,000
Total dividend
2,910,000

12%
10%
Preference Preference

5,000,000
(
120,000)
(1,250,000)
(
750,000)
2,880,000

120,000
1,250,000
-___

120,000

720,000
1,970,000

Before participation, one year dividend is paid to ordinary share capital using
the participating preference rate. The balance for participation is disturbed
on a prorata basis as follows:
Amount
Allocation

10% Preference share
720,000
Ordinary share
2,160,000

2,500,000
7,500,000
10,000,000

2,880,000

Fraction
25/100
75/100


184
CHAPTER 11
Problem 11-1
1.
2.
3.
4.
5.

D
B
D
A
D

6.
7.
8.
9.
10.

A
B
B
B
A

Problem 11-2
11. D
12. A
13. B
14. A
15. B

1. C
2. B
3. B
4. B
5. A

6. B
7. A
8. A
9. C

10. A

Problem 11-3
1. Basic earnings per share:
Income from continuing operations (3,400,000 / 50,000)
Loss from discontinued operations (600,000 / 50,000)
(12)
Net income
2. Basic earnings per share:
Income from continuing operations
Less: Preference dividend (10% x 2,000,000)
200,000

68
56
3,400,000


Income to ordinary share

3,200,000

Income from continuing operations (3,200,000 / 50,000)
Loss from discontinued operations
(12) Net income

64
52

Problem 11-4

1.

Date
January
1
June
1
September 30

Shares
120,000
12,000
( 24,000)

Fraction
12/12
7/12
3/12

Average
120,000
7,000
( 6,000)
121,000

2. Basic earnings per share (3.630,000 / 121,000)
30
Problem 11-5
1.

Date
January 1
April
1

Shares
120,000
20,000

Fraction
12/12
9/12

Average
120,000
15,000
135,000

185
2. Income from continuing operations
Less: Preference dividend actually paid
Income to ordinary share

3,765,000
120,000
3,645,000

Basic earnings per share:
Income from continuing operations (3,645,000 / 135,000)
27

Loss from discontinued operations (540,000 / 135,000)
( 4)
Net income per share

23

Problem 11-6
Date
1. January
May
July
December

1
1
1
1

Shares
150,000
30,000
12,000
6,000

Months
12
8
6
1

Average shares (1,974,000 / 12)

Peso months
1,800,000
240,000
(
72,000)
6,000
1,974,000
164,500


2. Net loss
(2,690,000)
Preference dividend (12% x 5,000,000)
( 600,000)
Total loss to ordinary share
(3,290,000)
Basic loss per share (3,290,000 / 164,500)
(20)
Problem 11-7
Date
1. January
May
July

1
1
1

Shares
1,000,000
120,000
48,000

Months
12
10
2

Peso months
12,000,000
1, 200,000
(
96,000)
13,104,000

Average shares (13,104,000 / 12)
1,092,000
2. Net income
Less: Preference dividend (10% x 4,000,000)
400,000
Adjusted income to ordinary share
5,460,000

5,860,000

Basic earnings per share (5,460,000 / 1,092,000)

5

186
Problem 11-8
1. Basic earnings per share (1,735,000 / 50,000)

34.70

2. Ordinary shares outstanding
50,000
Assumed issued ordinary shares through bond conversion (1,000 x 10)
10,000
Total ordinary shares
60,000
Net income
Add: Interest on bonds payable (10% x 1,000,000 x 65%)
65,000
Adjusted income

1,735,000
1,800,000


Diluted EPS (1,800,000 / 60,000)

30

Problem 11-9
1. Net income
Less: Preference dividend (10% x 5,000,000)
500,000

Adjusted income to ordinary share
4,900,000
Basic EPS (4,900,000 / 200,000)
2. Ordinary shares outstanding
200,000
Assumed issued ordinary shares through bond conversion
of preference share (50,000 x 2)
100,000
Total ordinary shares

5,400,000

24.50

300,000

Diluted EPS (5,400,000 / 300,000)
18
Problem 11-10
1. Net income
Less: Preference dividend (12% x 3,000,000)
360,000
Net income to ordinary share
3,342,500
Basic EPS (3,342,500 / 100,000)
2. Net income
Add: Interest on bonds payable (1,500,000 x 10% x 65%)
97,500
Adjusted income

3,702,500

33.42
3,702,500
3,800,000

187
Ordinary shares outstanding
Assumed issued ordinary shares through bond conversion
(1,500 x 20)
Assumed issued ordinary shares through conversion of
preference (30,000 x 2)
60,000

100,000
30,000


Total ordinary shares

190,000

Diluted EPS (3,800,000 / 190,000)
20
Note:
Incremental EPS on BP (97,500 / 30,000)
Incremental EPS on PS (360,000 / 60,000)
6.00

3.25

Both the BP and PS are potentially dilutive because the incremental EPS is very
much lower than the basic EPS.
Problem 11-11
1. Net income
Less: Preference dividend (20,000 x 5)
100,000
Net income to ordinary share
2,320,000

2,420,000

Basic EPS (2,320,000 / 100,000)
23.20
2. Net income
Add: Interest on bonds payable (2,000,000 x 10% x 65%)
130,000
Adjusted income

2,420,000
2,550,000

Ordinary shares outstanding
100,000
Assumed issued ordinary shares through bond conversion
30,000
Assumed issued ordinary shares through preference share conversion
40,000
Total ordinary shares
170,000

Diluted EPS (2,550,000 / 170,000)
15
Problem 11-12
1. Basic EPS (2,758,000 / 100,000)
27.58


188
2. Ordinary shares outstanding
Assumed issued ordinary shares through bond conversion
(2,000 x 10 = 20,000 x 9/12)
15,000
Total ordinary shares
Net income
Add: Interest on bonds (12% x 2,000,000 x 9/12)
Less: Income tax – 35%
117,000
Adjusted income

100,000

115,000
2,758,000

180,000
63,000
2,875,000

Diluted EPS (2,875,000 / 115,000)
25

Problem 11-13
1. January 1 (100,000 x 12)
1,200,000
April
1 (3,000 x 20 = 60,000 x 9)
540,000
1,740,000
Average (1,740,000 / 12)

145,000

Basic EPS (2,320,000 / 145,000)
16
2. Ordinary shares outstanding
100,000
Ordinary shares issued through actual bond conversion (3,000 x 20)
60,000
Assumed ordinary shares issued through conversion of remaining
bonds (1,000 x 20)
20,000
Total ordinary shares
180,000
Since the bonds are outstanding on January 1, 2008, the ordinary shares
issued through the actual bond conversion are considered outstanding from
January 1, 2008.
Net income
Add: Interest on bonds actually converted
(3,000,000 x 12% x 3/12)
Interest on remaining bonds (1,000,000 x 12%)

2,320,000
90,000
120,000


Total
Less: Income tax – 35%
136,500
Adjusted income

210,000
73,500
2,456,500

Diluted EPS (2,456,500 / 180,000)
13.65

189
Problem 11-14
1. Basic EPS (7,500,000 / 200,000)
37.50
2. Total option price (50,000 x 60)
Ordinary shares actually outstanding
200,000 Incremental ordinary shares:
Option shares
Less: Assumed treasury shares (3,000,000 / 75)
10,000 Total ordinary shares
210,000

3,000,000

50,000
40,000

Diluted EPS (7,500,000 / 210,000)
35.71
Problem 11-15
1. Basic EPS (3,000,000 / 60,000)

50

2. Total option price (20,000 x 160)
3,200,000
Option shares
Less: Assumed treasury shares (3,200,000 / 250)
12,800 Incremental ordinary shares
7,200 Multiply by (9 months)
9/12
Average incremental shares
Ordinary shares actually outstanding
Total
Diluted EPS (3,000,000 / 65,400)
Problem 11-16

20,000

5,400
60,000
65,400
45.87

1. January 1 Beginning balance
April
1 (50,000 x 9/12)
Total ordinary shares

100,000
37,500
137,500

Basic EPS (5,500,000 / 137,500)

40

2. Proceeds from assumed exercise of options (50,000 x 140)
7,000,000

190
January 1
Beginning balance
April
1
(50,000 x 9/12)
Incremental ordinary shares:
Option shares
Less: Assumed treasury shares (7,000,000 / 400)
Incremental shares
Weighted average (32,500 x 3/12)
8,125

Total ordinary shares

100,000
37,500
50,000
17,500
32,500
145,625

Diluted EPS (5,500,000 / 145,625)
37.77
Problem 11-17
1. Net income
Less: Preference dividend (10,000 x 30)
300,000
Adjusted income
January
1 Beginning balance
September 1 (60,000 x 4/12)
20,000

6,700,000
6,400,000
300,000
320,000

Basic EPS (6,400,000 / 320,000)
2. Net income
Less: Preference dividend
Balance

Add: Interest on bonds (1,000,000 x 10%)
Less: Income tax 35%
65,000
Adjusted income

20
6,700,000
300,000
6,400,000
100,000
35,000
6,465,000


Proceeds from assumed exercise of options (30,000 x 25)
750,000
January
1 Balance
300,000
September 1 Issued (60,000 x 4/12)
20,000
Assumed issued ordinary shares through bond conversion
(1,000 x 40)
40,000
Incremental ordinary shares:
Option shares
30,000
Less: Assumed treasury shares (750,000 / 30)
25,000
5,000

Warrants to purchase 20,000 ordinary shares – antidilutive
because the exercise price is higher than the average
market price
-___
Total ordinary shares
365,000

191
Diluted EPS (6,465,000 / 365,000)
17.71
Problem 11-18
Ordinary shares – 12/31/2008
200,000
Bonus issue (200,000 x 2)
400,000
Total shares outstanding – 12/31/2009
600,000
Basic earnings per share:
2008(18,000,000 / 600,000)
30.00
2009(60,000,000 / 600,000)
100.00
Problem 11-19
1. Market value of ordinary shares outstanding (600,000 x 11)
6,600,000
Proceeds from exercise of rights (120,000 x 5)
600,000
Total
Shares outstanding

7,200,000
600,000


Shares issued through exercise of rights
120,000
Total shares outstanding
720,000
Theoretical value of stock ex-right (7,200,000 / 720,000)
10
2. Adjustment factor (11/10)
1.10
3. 2008
Shares outstanding
Adjustment factor
Adjusted shares
660,000

600,000
1.10

Basic EPS (11,000,000 / 660,000)
16.67
2009
January 1
110,000
March 1
Total

(600,000 x 1.10 x 2/12)

(720,000 x 10/12)

600,000
710,000

Basic EPS (15,000,000 / 710,000)
21.13
2010
Basic EPS (18,000,000 / 720,000)
25.00

192
Problem 11-20
1. Ordinary shares – 01/01/2008
1,000,000
April 1 (50,000 x 9/12)
July 1 (50,000 x 6/12)
Total
Basic EPS (5,900,000 / 1,062,500)
5.55
2. Ordinary shares – 01/01/2008
1,000,000

37,500
25,000
1,062,500


April 1 – new branch
50,000

July 1 – new branch
50,000
December 31 – net income in excess of P5,000,000 (900 x 1,000)
900,000
Total
2,000,000
Diluted EPS (5,900,000 / 2,000,000)

2.95

Problem 11-21 Answer A
Net income
Less: Preference dividend
Net income to ordinary share
630,000

750,000
120,000

Basic EPS (630,000 / 60,000)
10.50
Problem 11-22 Answer A
January 1
120,000
June
30
30,000
150,000

80,000 + 40,000

40,000 + 20,000 x 6/12
Average shares

Basic EPS (2,400,000 / 150,000)
16
Problem 11-23 Answer C
January 1
396,000
March 1
90,000
July
1
48,000

33,000 x 12 months
9,000 x 10 months
8,000 x 6 months
534,000

Average number of shares (534,000 / 12)
44,500

193
Problem 11-24 Answer C


January 1 300,000 + 30,000 x 12 months
3,960,000
October 1
24,000 x 3 months

(
72,000)
3,888,000
Average number of shares (3,888,000 / 12)
324,000
Problem 11-25 Answer B
January 1
100,000 x 2 x 1.20
June 1
30,000 x 1.20 x 7/12
Average number of shares

240,000
21,000
261,000

Problem 11-26 Answer B
January 1 (100,000 x 2 x 1.20 x 3)
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)
Average shares

720,000

864,000

Problem 11-27 Answer A

January 1
(44,000 x 1.25 x 3)
1,650,000
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
Average shares

(

305,000

Problem 11-28
Question 1 Answer A
2008
January 1
900,000
March 1
October 1
December 1
3,750)

(250,000 x 1.20 x 3)
(24,000 x 1.20 x 3 x 10/12)

(16,000 x 3 x 3/12)
(15,000 x 3 x 1/12)

72,000
12,000
(