1. Financial accounting (AS Level)
A section of Accounting, 9706
Listing 10 of 1775 questions
M Limited has provided the following extract from the statement of financial position at 31 August 2016. $ Equity Capital and reserves Ordinary shares of $0.25 each 200 000 Share premium 80 000 Revaluation reserve 40 000 Retained earnings 37 500 357 500 The following information is available. On 1 January 2017 a rights issue was made on the basis of two ordinary shares for every five ordinary shares held at a price of $0.40 per share. The rights issue was fully subscribed. On 30 June 2017 an interim dividend of $0.04 per share was paid on all shares in issue at that date. At 31 August 2017 non-current assets were re-valued downwards by $48 000. Profit for the year ended 31 August 2017 was $22 500. REQUIRED Prepare the statement of changes in equity for the year ended 31 August 2017. A total column is not required. State two reasons why capital reserves may be used before revenue reserves to fund a bonus issue of shares for a limited company. State two benefits to a limited company of making a rights issue. State one limitation to a limited company of making a rights issue. Additional information Directors of M Limited are considering obtaining a long-term bank loan to raise additional capital. REQUIRED Explain two advantages to the company of this course of action.
9706_s18_qp_22
THEORY
2018
Paper 2, Variant 2
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K Limited prepares annual accounts to 30 September. For the year ended 30 September 2018, the directors have calculated profit from operations of $44 500. On 31 January 2018 they redeemed a 6% debenture of $100 000 together with accrued interest to that date. REQUIRED Calculate the profit for the year ended 30 September 2018. Additional information The directors have provided the following extract from the statement of financial position at 1 October 2017. Equity $ Ordinary shares of $0.25 each 500 000 Share premium 175 000 Retained earnings 540 000 1 215 000 The following information is also available: On 31 December 2017, a rights issue of ordinary shares was made at a premium of $0.15 per share on the basis of 2 ordinary shares for every 5 held on that date. The issue was fully subscribed. On 31 March 2018, a bonus issue was made on the basis of 3 ordinary shares for every 5 held on that date. Reserves were maintained in the most flexible form. On 30 June 2018, an interim dividend of $0.05 per share was paid on all shares in issue on that date. On 30 September 2018, buildings were revalued at $1 200 000. The original cost of the buildings was $1 000 000 and had been depreciated by $150 000. REQUIRED Prepare the statement of changes in equity for the year ended 30 September 2018. Ordinary shares $ Share premium $ Revaluation reserve $ Retained earnings $ At 1 October 2017 500 000 175 000 – 540 000 Workings: State one difference between a capital reserve and a revenue reserve.
9706_s19_qp_21
THEORY
2019
Paper 2, Variant 1
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Questions Discovered
1775