Sangster, Frank Wood’s Business Accounting 2, 14e, Solutions Manual
Answers Answer to Question 2.5A BA 2 (Dates omitted) (a) Forfeited shares (5,000 × £1)
Ordinary Share Capital 5,000
Balance c/d
595,000 600,000
Balance c/d
600,000 600,000
Balance b/d Application and allotment First and final call
500,000 70,000 30,000 600,000
Balance b/d Amber
595,000 5,000 600,000
(b)
Share Premium
Balance c/d
52,500 52,500
(c) Bank refunds (75,000 × 65p) Bank refunds re: 3 for 4 allotment (25,000 × 65p) Ordinary share capital Share premium (d) Ordinary share capital (100,000 × 30p)
Application and allotment Forfeited shares
Application and Allotment 48,750 16,250 70,000 50,000 185,000
Bank (200,000 × 65p) Bank (100,000 × 55p)
First and Final Call 30,000 30,000
Bank (95,000 × 30p) Forfeited shares (5,000 × 30p)
Forfeited Shares
First and final call Amber Ltd Share premium
1,500 1,000 2,500 5,000
Ordinary share capital
130,000 55,000
185,000
(e)
( f )
50,000 2,500 52,500
Ordinary share capital
28,500 1,500 30,000
5,000 5,000
Amber Ltd 5,000 5,000
Bank (5,000 × 80p) Forfeited shares*
* Discount on reissue
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4,000 1,000 5,000
Sangster, Frank Wood’s Business Accounting 2, 14e, Solutions Manual
Answer to Question 2.7A BA 2 Grobigg Ltd Application and Allotment Cash: return of unsuccessful Cash: 180,000 × 0.75 application monies 8,000 × 0.75 6,000 Share capital: Due on application Cash: Balance due on allotment and allotment 150,000 × 0.80 120,000 Share premium 150,000 × 0.15 22,500 148,500
135,000 13,500 148,500
Call Share capital 150,000 × 0.20
Cash: 149,600 × 0.20 Forfeited shares 30,000 30,000
29,920 80 30,000
Forfeited Shares Call Share capital Share premium
80 Share capital 400 Cash: 400 × 0.90 280 760
400 360 760
Share Premium
Application and allotment Forfeited shares
22,500 280
Share Capital Forfeited shares Balance c/d
400 150,000
Application and allotment Forfeited shares Call 150,400
120,000 400 30,000 150,400
(a) Dr (A1) Bank 7,000 (A2) Preference share applicants Cash received from applicants
Cr
Answer to Question 3.2A BA 2
(B1)
Preference share applicants 7,000 (B2) Preference share capital Preference shares allotted (C1) Retained profits 3,000 (C2) Capital redemption reserve Part of purchase price of shares not covered by new issue to comply with Companies Acts
7,000
7,000
3,000
(D1) Ordinary share capital 10,000 (D2) Ordinary share purchase Shares being purchased
10,000
Ordinary share purchase 10,000 (E2) Bank Payment made for share purchase
10,000
(E1)
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Sangster, Frank Wood’s Business Accounting 2, 14e, Solutions Manual
Net assets (except bank) Bank
Balances Effect Balances before Dr Cr after 31,000 31,000 16,000 (A1) 7,000 (E2) 10,000 13,000 47,000 44,000
Preference share capital 8,000 (B2) 7,000 15,000 Preference share applicants (B1) 7,000 (A2) 7,000 – Ordinary share capital 20,000 (D1) 10,000 10,000 Ordinary share purchase (E1) 10,000 (D2) 10,000 – Capital redemption reserve (C2) 3,000 3,000 Share premium 4,000 4,000 32,000 32,000 Retained profits 15,000 (C1) 3,000 12,000 47,000 44,000 (b) Dr (A1) Ordinary share capital 12,000 (A2) Ordinary share purchase Shares being purchased
Cr 12,000
(B1) Retained profits 2,400 (B2) Ordinary share purchase Premium on purchase of shares not previously issued at premium
2,400
(C1) Retained profits 12,000 (C2) Capital redemption reserve Transfer because shares purchased out of distributable profits
12,000
(D1) Ordinary share capital 14,400 (D2) Bank Payment of redemption
14,400
Net assets (except bank) Bank
Balances Effect Balances before Dr Cr after 31,000 31,000 16,000 (D2) 14,400 1,600 47,000 32,600
Preference share capital 8,000 8,000 Ordinary share capital 20,000 (A1) 12,000 8,000 Ordinary share purchase (D1) 14,400 (A2) 12,000 (B2) 2,400 Capital redemption reserve (C2) 12,000 12,000 Share premium 4,000 4,000 32,000 32,000 (C1) 12,000 Retained profits 15,000 (B1) 2,400 600 32,600 47,000
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Sangster, Frank Wood’s Business Accounting 2, 14e, Solutions Manual
(c) Dr (A1) Preference share capital 8,000 (A2) Preference share purchase Shares to be purchased (B1)
Cr 8,000
Preference share purchase 8,000 (B2) Bank Cash paid on purchase
8,000
(C1) Retained profits 8,000 (C2) Capital redemption reserve Transfer per Companies Acts
8,000
Net assets (except bank) Bank
Balances Effect Balances before Dr Cr after 31,000 31,000 16,000 (B2) 8,000 8,000 47,000 39,000
Preference share capital 8,000 (A1) 8,000 – Preference share purchase (B1) 8,000 (A2) 8,000 – Ordinary share capital 20,000 20,000 Capital redemption reserve (C2) 8,000 8,000 Share premium 4,000 4,000 32,000 32,000 Retained profits 15,000 (C1) 8,000 7,000 47,000 39,000 (d ) Dr (A1) Bank 12,000 (A2) Preference share applicants Cash received from applicants (B1)
Preference share applicants 12,000 (B2) Preference share applicants Preference shares allotted (C1)
Cr 12,000
12,000
Ordinary share capital 12,000 (C2) Ordinary share purchase Shares to be purchased
12,000
(D1) Ordinary share purchase 12,000 (D2) Bank Payment made to purchase shares
12,000
Net assets (except bank) Bank Preference share capital Preference share applicants Ordinary share capital Ordinary share purchase Share premium Retained profits
Balances Effect Balances before Dr Cr after 31,000 31,000 16,000 (A1) 12,000 (D2) 12,000 16,000 47,000 47,000 8,000 (B2) 12,000 20,000 – (B1) 12,000 (A2) 12,000 – 20,000 (C1) 12,000 8,000 – (D1) 12,000 (C2) 12,000 – 4,000 4,000 32,000 32,000 15,000 15,000 47,000 47,000
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