Month: January 2023

The information below shows some extracts from Alex Ltd’s SOFP at 31 December 2014 and at 31 December 2015.

• ordinary shares of £1 each: 31/12/14 – £100M & 31/12/15 – £130M
• share premium account: 31/12/14 – £50M & 31/12/15 – £80M

On 1 July 2015 there was a bonus issue of 1 ordinary share for every 10 held.

On 1 October 2015 there was a rights issue.

There were no other reserve balances.

How much cash was received from the issue of shares in the year ended 31 December 2015?

Select ONE answer:

1. £20M
2. £30M
3. £50M
4. £60M

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 4

1. Not correct
2. Not correct
3. Not correct
4. Correct = = > Bonus issue was worth £10M, so Share premium would have gone down £10M. The subsequent rights issue would have been for 20M shares of £1 each at £3 per share = = > £60M

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A company’s SOFP shows the following information:

£1 ordinary shares – £500k
Retained earnings – £400k
10% debentures – £300k
Total Capital Employed & Net Assets – £1,200k

A fully subscribed 1 for 4 rights issue at £2 per share is made and 50 % of the debentures are repaid at par.

What are the net assets following these changes?

Select ONE answer:

1. £1,100k
2. £1,175k
3. £1,225k
4. £1,300k

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 4

1. Not correct
2. Not correct
3. Not correct
4. Correct = £1,200 – (£300k / 2) + (500k / 4 * £2) = = > £1,300k

This work is licensed under a Creative Commons Attribution 4.0 International License.

Hilary and Lee commenced in partnership on 1 January 2015.

There was no partnership agreement concerning the division of interest on the loan or of profits.

• capital contributions: Hilary £5,000 & Lee £600
• loan to partnership: Hilary £0 and Lee £1,000

At the year end, 31 December 2015, profit for the year before the loan interest was £8,850.

What would be Hilary’s share of the profit?

Select ONE answer:

1. £4,400
2. £4,425
3. £4,800
4. £4,827

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 – Partnership Act 1890 £8,850 – (£1,000 * 05%) / 2 = = > £4,400
2. Not correct
3. Not correct
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.