Accounting Multiple Choice Question – 10 August 2024

At the 31 December 2022, the capital structure of Alex plc was as follows:

• 100,000 equity shares of 50p each  £50,000
• Share premium account  £180,000

During 2023 the company made a 1 for 2 bonus issue, using the share premium account for the purpose, and later did a rights issue for cash of another 60,000 shares at a strike price of 80p per share (30p share premium).

What is the company’s capital structure as at 13 December 2023?

Select ONE answer:

1. Equity Share Capital £130k and Share Premium Account £173k
2. Equity Share Capital £105k and Share Premium Account £173k
3. Equity Share Capital £130k and Share Premium Account £137k
4. Equity Share Capital £105k and Share Premium Account £137k

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 2

1. Notcorrect
2. Correct  –> Share Capital is £50k + (Bonus issue 50,000 * £0.50p = £25k) + (Rights issue 60,000 * £0.50p = £30k) then Share Premium is £180k – (Bonus issue 50,000 * £0.50p = £25k) + Rights issue 60,000 * £0.30p = £18k)
3. Not correct
4. Not correct

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