Accounting Multiple Choice Question – 26 August 2024

On 1 January 2023 Alex plc has £300,000 of 50p equity shares in issue, and a balance on the share premium account of £750,000.

On 1 April 2023, the company makes a 1 for 3 bonus issue.

The balance on Alex plc’s share premium account as at 31 December 2023 is?

Select ONE answer:

1. £450,000
2. £550,000
3. £650,000
4. £850,000

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 3

1. Not correct
2. Not correct
3. Correct – £0.50 face value * 600,000 shares == > 1/3 Bonus issue = 200,000 shares * £0.50 = £100k == > Dr Share Premium £100k Cr Share Capital £100k == > Share Premium now £650k
4. Not correct

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