Accounting Multiple Choice Question – 15 August 2024

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

• 200,000 equity ordinary shares of 25p each £50,000
• Share premium account £75,000

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

30 April 2024 – 1 for 5 rights issue at £1.25 per share and this was taken up in full.

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

Select ONE answer:

1. £35,000
2. £75,000
3. £85,000
4. £115,000

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 – 200,000/5 = 40,000 shares.  Balance on share premium account thus becomes £75,000 + (40,000 x £1) = £115,000

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