Reference no: EM133077845
Problem 1 - Aleah Company reported the following information at yearend:
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2019
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2018
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Ordinary shares outstanding
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360,000
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300,000
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Nonconvertible preference share outstanding
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10,000
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10,000
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10% convertible bonds payable - face amount
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1,000,000
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1,000,000
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Additional information:
1. On September 1, 2019, the entity sold 60,000 additional ordinary shares.
2. Net income for the year ended December 31, 2019 was P6,700,000.
3. During 2019, the entity paid dividends of P30 per share on the nonconvertible preference shares.
4. The 10% convertible bonds are convertible into 40 ordinary shares for each P1,000 bond.
5. Unexercised share options to purchase 30,000 ordinary shares at P20 per share were outstanding at the beginning and end of 2019. The average market price of ordinary share was P3o during the current year. The market price was P40 on December 31, 2019.
6. Warrants to purchase 20,000 ordinary shares at P45 per share were attached to the preference shares at the time of issuance. The warrants, which expires on December 31, 2021 were outstanding on December 31, 2019.
7. The income tax rate is 30%.
Required - Compute for the following:
1. Journal Entries
2. Basic earnings per share
3. Total number of potentially dilutive ordinary shares
4. Diluted earnings per share
Problem 2 - On January 1, 2019, Hage Corporation granted options to purchase 9,000 of its ordinary shares at 7 each. The market price was 10.50 per ordinary share on March 31, 2019, and averaged 9 per share during the quarter then ended. There was no change in the 50,000 shares of outstanding common stock during the quarter ended March 31, 2019. Profit for the quarter was 8,268.
Required - Compute the number of shares to be used in computing diluted earnings per share for the quarter.
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