Accounting Multiple Choice Question – 25 September 2022

At 1 January 2015 the capital structure of Lucy Limited was as follows.

• issued share capital 100 000 ordinary shares of £1 each – £100,000
• share premium account – £30,000

On 1 April 2015 the company made an issue of 20,000 shares for £36,000.

On 1 June 2015 a bonus issue of one share for every six in issue was made.

The share premium account was used for the purpose.

What is the balance on the share premium account at 31 December 2015?

Select ONE answer:

1. £26,000
2. £34,000
3. £46,000
4. £56,000

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 1

1. Correct – 1 April 2015 Dr Bank £26,000 Cr SC £20,000 Cr SP £16,000, then 1 June 2015 Dr SP £20,000 (120,000 shares / 6) Cr SC £20,000 = = > SP Balance £30k + £16k – £20k = ££26k
2. Not correct
3. Not correct
4. Not correct

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