Accounting Multiple Choice Question – 10 February 2023

The information in the table relates to Alex plc:

• share premium account – £240,000
• 10 % debentures – £100,000
• retained profit – £180,000

The company redeems the debentures at a premium of 10 %.

What will be the effect on Alex’s Statement Of Financial Position?

Select ONE answer:

1. retained profit £70,000 / share premium account £240,000
2. retained profit £80,000 / share premium account £230,000
3. retained profit £170,000 / share premium account £240,000
4. retained profit £180,000 / share premium account £230,000

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 4

1. Not correct
2. Not correct
3. Not correct
4. Correct == > £240,000 – £100,000 * 0.1

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