PABRES, JOCELLE P ACC 221 (7751) 1:30-2:30pm

LET’S ANALYZE BVPS #4-7

Problem 4 (Adapted) The shareholders equity of Joyce corporation on Dec.
31, 2018 shows the following
account balances:
10% preference share, 10,000 shares, 100 par 1,000,000
12% preference share, 12,000 shares, 100 par 1,200,000
Ordinary share, 20,000 shares, 40 par 800,000
Share premium 640,000
Accumulated profits 960,000

The 10% preference share is cumulative and fully participating, while the 12%
preference share is non cumulative and fully participating. The last payment
of dividends was on Dec. 31, 2016. What is the book
value per share of ordinary shares?
Excess 10%Preference 12%Preference Ordinary
Balances
(640,000 + 960,000) 1,600,000 1,000,0000 1,200,000 800,000
10% x 1,000,000 x 2 (200,000) 200,000
12% x 1,200,000 x 1 (144,000) 144,000
10% x 800,000 x 1 (80,000) 80,000
Balance – prorate 1,176,000 392,000 470,400 313,600
Divide shares Outs. 10,000 12,000 20,000
Book value per share 159.2 151.2 59.68

Problem 5
Dixie company’s equity at Dec. 31, 2017, consisted of the following:
8% cumulative preference share capital, 50 par, Liquidating value 55 per
share, authorized, Issued and outstanding 40,000 shares, 2,000,000,
Ordinary share capital, 25 par, 400,000 shares authorized, 100,000 shares
issued and outstanding, 5,000,000 and Retained earnings, 400,000.
Dividends on preference share have been paid through 2015 but have not
been declared for 2016 and 2017. At Dec. 31, 2017, what is Dixie’s book
value per ordinary share?

Total Equity ( 2,000,000 + 5,000,000 + 400,000) 7,400,000

Preference shareholders’ equity:
Preference Share Capital 3,000,000
Liquidating Premium {40,000 x (55-50)} 200,000
Preference Dividend in Arrears
( 2,000,000 x 8% x 2) 320,000 (2,520,000)
Ordinary shareholders’ Equity 4,880,000
Divide: Ordinary shares 100,000
Book Value per share 48.80
PABRES, JOCELLE P ACC 221 (7751) 1:30-2:30pm
LET’S ANALYZE BVPS #4-7

Problem 6 (Adapted)
Anna company presented the following account balances in the shareholders’ equity
section for the year ended December 31, 2018: Preference share capital, 12% P50
par, P3,000,000, Ordinary share capital, P100 par, P6,000,000 and deficit,
(P1,350,000). No dividends have been paid on the preference share since 2016.
Determine the book value per share under the following conditions:
a. Preference share is preferred as to assets
Answer:

Activity 7 (Adapted)
Shaina company reported the following shareholders’ equity on December 31,
2019: Preference share capital, 10% cumulative and non participating, P100
par, 10,000 shares P1,000,000 Ordinary share capital, P100 par, 20,000
shares 2,000,000 Subscribed ordinary share capital, 10,000 shares 1,000,000
Subscriptions receivable 250,000 Share Premium 500,000 Retained Earnings
1,200,000 Treasury ordinary shares, 5,000 at cost 400,000 The preference
dividends are in arrears for 2017, 2018 and 2019.
a. What is the book value per ordinary share?

TOTAL SHE 5,300,000

Capital Investment of shares (1,000,000)
Unpaid Earnings of Pref. Shares
(1,000,000 x 10% x 3) (300,000)
Remaining SHE for Ordinary Shares 4,000,000
Divide: Outstanding shares plus subscribe 25,000
BVPS 160
PABRES, JOCELLE P ACC 221 (7751) 1:30-2:30pm
LET’S ANALYZE BVPS #4-7
b.What is the book value per preference share?
Capital Investment of Pref. Shares 1,000,000
Unpaid earnings of Pref. Shares 300,000
Total 1,300,000
Divide: Outstanding Shares 10,000
BVPS 130