Tag: Capital

At the 30 June 2022, the capital structure of Alex plc was as follows:At the 1 April 2023, the capital structure of Alex plc was as follows:

• 300,000 equity ordinary shares of 25p each  £75,000
• Share premium account  £200,000

In the year ended 31 March 2024 the following events took place:

• 1 October 2023 – the company made a 1 for 5 rights issue at £1.20 per share and this was taken up in full.
• 1 January 2024 – the company made a 1 for 3 bonus issue, using the share premium account for the purpose of the issue.

What was the company’s share capital as at the 31 March 2024?

Select ONE answer:

1. £90k
2. £120k
3. £360k
4. £480k

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 £75k + (Rights issue 60,000 * £0.25p = £15k) + (Bonus issue 360,000 / 3 * £0.25p = £30k) ==> £120k
3. Not correct
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.

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

This work is licensed under a Creative Commons Attribution 4.0 International License.

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

This work is licensed under a Creative Commons Attribution 4.0 International License.

Which of the following general journals correctly records a bonus issue of shares?

Select ONE answer:

1. Debit Cash at bank, Credit Share capital
2. Debit Share capital, Credit Share premium
3. Debit Share premium, Credit Share capital
4. Debit Investments, Credit Cash at bank

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 –> A bonus issue does not involve cash being exchanged but can be financed from the existing share premium account.
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.