Accounting Multiple Choice Question – 13 August 2024

At the 30 June 2022, the capital structure of Alex plc was as follows:

• 500,000 equity ordinary shares of 25p each  £125,000
• Share premium account  £100,000

In the year ended 30 June 2023 the company made a 1 for 2 rights issue at £1 per share and this was taken up in full.

Later in the year the company made a 1 for 5 bonus issue, using the share premium account for the purpose.

What was the company’s capital structure as at 30 June 2023?

Select ONE answer:

1. Equity Share Capital £450k and Share Premium Account £25k
2. Equity Share Capital £225k and Share Premium Account £250k
3. Equity Share Capital £225k and Share Premium Account £325k
4. Equity Share Capital £212.5k and Share Premium Account £262.5k

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 £125k + (Rights issue 250,000 * £0.25p = £62.5k) + (Bonus issue 150,000 * £0.25p = £37.5k) then Share Premium is £100k + Rights issue 250,000 * £0.75p = £187.5k) – (Bonus issue 150,000 * £0.25p = £37.5k)
3. Not correct
4. Not correct

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