The summarised Balance Sheet of a sole trader shows:
- fixed assets – £200 000
- net current assets – £10 000
- capital – £210 000
He agrees to sell his business to a limited company. The purchase consideration is £260 000 being made up of £60 000 cash, £80 000 debentures and 180 000 ordinary shares of £0.50 each.
Which amount will be credited to the share premium account of the limited company?
Select ONE answer:
- £30 000
- £50 000
- £90 000
- £120 000
Show your workings to arrive at your answer, and explain and justify your reasons:
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This multiple-choice question is suitable for Accounting KS5 classes.
The answer is 1
- Correct – £60,000 + £80,000 + (180,000 * £0.5) = £230,000 ==> £260k – £230k = £30k
- Not correct
- Not correct
- Not correct
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