FA - Capital Structure

The issued share capital of Alpha, a limited liability company, is as follows: $

Ordinary shares of 10c each 1,000,000

8% Redeemable preference shares of 50c each 500,000

In the year ended 31 October 20X2, the company has paid the preference dividend for the year and an interim dividend of 2c per share on the ordinary shares. A final ordinary dividend of 3c per share was proposed, before the reporting date.

What would be recognised for dividends in the equity section of the statement of financial position at 31 October 20X2?

• $580,000

• $90,000

• $130,000

• $200,000

When a company makes a rights issue of equity shares which of the following effects will the issue have?

1 Assets are increased

2 Retained earnings are reduced

3 Share premium account is reduced

4 Investments are increased

• 1 only

• 1 and 2

• 3 only

• 1 and 4

A company made an issue for cash of 1,000,000 50c shares at a premium of 30c per share.

Which one of the following journal entries correctly records the issue?

• Dr. Share Capital 5,00,000 ; Dr. Share Premium 3,00,000; Cr. Bank 8,00,000

• Dr. Bank 8,00,000 ; Cr. Share Capital 5,00,000 ; Cr. Share Premium 3,00,000

• Dr. Bank 13,00,000 ; Cr. Share Capital 10,00,000 ; Cr. Share Premium 3,00,000

• Dr. Share Capital 10,00,000 ; Dr. Share Premium 3,00,000; Cr. Bank 13,00,000

At 31 December 20X1 the capital structure of a company was as follows:

Ordinary share capital $

100,000 shares of 50c each 50,000

Share premium account 180,000

During 20X2 the company made a bonus issue of 1 share for every 2 held, using the share premium account for the purpose, and later issued for cash another 60,000 shares at 80c per share.

What is the company's capital structure at 31 December 20X2?

• Ordinary share capital Rs.1,30,000; Share premium account Rs.1,73,000

• Ordinary share capital Rs.1,05,000; Share premium account Rs.1,73,000

• Ordinary share capital Rs.1,30,000; Share premium account Rs.1,37,000

• Ordinary share capital Rs.1,05,000; Share premium account Rs.1,37,000

An organisation's year end is 30 September. On 1 January 20X6 the organisation took out a loan of $100,000 with annual interest of 12%. The interest is payable in equal instalments on the first day of April, July, October and January in arrears.

How much should be charged to the statement of profit or loss (SPL) for the year ended 30 September 20X6, and how much should be accrued on the statement of financial position (SOFP)?

• SPL $12,000; SOFP $3,000

• SPL $9,000; SOFP $3,000

• SPL $9,000; SOFP Nil

• SPL $6,000; SOFP $3,000

Which of the following statements about company financial statements is/are correct, according to International Financial Reporting Standards?

1. Dividends paid on ordinary shares should be included in the statement of profit or loss and other comprehensive income.

2. Dividends paid on redeemable preference shares are treated in the same way as dividends paid on ordinary shares.

3. The statement of profit or loss and other comprehensive income shows the gain on revaluation of non-current assets for the period.

• 1, 2 and 3

• 2 and 3

• 3 only

• All three statements are correct

At 30 June 20X2 a company's capital

structure was as follows :

Ordinary share capital $

500,000 shares of 25c each 125,000

Share premium account 100,000

In the year ended 30 June 20X3 the company made a rights issue of 1 share for every 2 held at $1 per share and this was taken up in full. Later in the year the company made a bonus issue of 1 share for every 5 held, using the share premium account for the purpose.

What was the company's capital structure at 30 June 20X3?

• Ordinary share capital Rs.4,50,000; Share premium account Rs.25,000

• Ordinary share capital Rs.2,25,000; Share premium account Rs.2,50,000

• Ordinary share capital Rs.2,25,000; Share premium account Rs.3,25,000

• Ordinary share capital Rs.2,12,500; Share premium account Rs.2,62,500

At 30 June 20X2 a company had $1m 8% loan notes in issue, interest being paid half-yearly on 30 June and 31 December.

On 30 September 20X2 the company redeemed $250,000 of these loan notes at par, paying interest due to that date.

On 1 April 20X3 the company issued $500,000 7% loan notes, interest payable half-yearly on 31 March and 30 September.

What figure should appear in the company's statement of profit or loss for interest payable in the year ended 30 June 20X3?

• $88,750

• $82,500

• $65,000

• $73,750

A limited liability company issued 50,000 ordinary shares of 25c each at a premium of 50c per share. The cash received was correctly recorded but the full amount was credited to the ordinary share capital account.

Which one of the following journal entries is needed to correct this error?

• Dr. Share premium account Rs. 25,000; Cr. Share capital account Rs.25,000

• Dr. Share capital account Rs. 25,000; Cr. Share premium account Rs.25,000

• Dr. Share capital account Rs. 37,500; Cr. Share premium account Rs.37,500

• Dr. Share capital account Rs. 25,000; Cr. Cash Rs. 25,000

Which one of the following journal entries could correctly record a bonus issue of shares?

• Dr. Cash Rs. 1,00,000 Cr. Ordinary share capital Rs.1,00,000

• Dr. Ordinary share capital Rs.1,00,000 Cr. Share Premium Rs. 1,00,000

• Dr. Share Premium Rs. 1,00,000 Cr. Ordinary share capital Rs.1,00,000

• Investment Rs. 1,00,000 Cr. Cash Rs. 1,00,000