Accounting Multiple Choice Question – 14 August 2024

At the 1 July 2023, the capital structure of Alex plc was as follows:

1,000,000 equity ordinary shares of 50p each £500,000
Share premium account £400,000

In the year ended 30 June 2024 the company made the following changes to their capital structure:

• 1 January 2024 – 1 for 4 bonus issue.
• 30 April 2024 – 1 for 10 rights issue at £1.50 per share and this was taken up in full.

What was the company’s capital structure in terms of share capital and share premium as at 30 June 2024?

Select ONE answer:

1. Equity Share Capital £687.5k and Share Premium Account £650k
2. Equity Share Capital £675k and Share Premium Account £375k
3. Equity Share Capital £687.5k and Share Premium Account £150k
4. Equity Share Capital £687.5k and Share Premium Account £400k

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 – Shares at start of year = 1M, add Bonus issue 250k shares and then rights issue 125k shares for a total of 1,375k shares. Capital is £500k + Bonus issue £125k + Rights issue £62.5k for a total of £687.5k then Share Premium is £400k – Bonus issue £125k + Rights issue £125k for a total of £400k

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