Accounting Multiple Choice Question – 5 April 2021

A company’s Balance Sheet extract is given. 

The directors have decided to write off the debit balance on the Profit and Loss Account together with Goodwill of £100,000.

The shareholders agreed to exchange their shares for new ordinary shares of £0.50.

How many shares will the directors have to issue to the shareholders? 

Select ONE answer:

1. 600,000
2. 700,000
3. 1,200,000
4. 1,400,000

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 3

1. Not correct
2. Not correct
3. Correct ==> £700k – £100k = £600k * 2 ==> 1.2M shares
4. Not correct

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