Solutions Manual - Answers Answer to Question 2.5A  BA 2 (Date...

Solutions Manual Frank Wood’s Bu siness Accounting Volume 2 Fourteenth Ed ition Alan San gster 1 / 4

© Pearson Education Limited 2019 5Sangster, Frank Wood’s Business Accounting 2, 14e, Solutions Manual Answers Answer to Question 2.5A  BA 2 (Dates omitted) (a) Ordinary Share Capital Forfeited shares (5,000 × £1) 5,000 Balance b/d500,000 Application and allotment70,000 Ba lance c/d 595,000 First and final call 30,000

600,000 600,000

Balance b/d595,000 Ba lance c/d 600,000 Amber 5,000

600,000 600,000

(b) Share Premium Application and allotment50,000 Ba lance c/d 52,500 Forfeited shares 2,500

52,500 52,500

(c) Application and Allotment Bank refunds (75,000 × 65p) 48,750 Bank (200,000 × 65p)130,000 Bank r

efunds re: 3 for 4

Bank (100,000 × 55p)55,000   allotment (25,000 × 65p) 16,250 Or dinary share capital

70,000

Shar e premium

50,000

185,000 185,000

(d) First and Final Call Ordinary share capital Bank (95,000 × 30p)28,500

(100,000

× 30p) 30,000 Forfeited shares (5,000 × 30p) 1,500

30,000 30,000

(e) Forfeited Shares First and final call 1,500 Ordinary share capital5,000 Amber Ltd 1,000 Shar e premium 2,500

5,000 5,000

• Amber Ltd

Ordinary share capital 5,000 Bank (5,000 × 80p)4,000 Forfeited shares*1,000

5,000 5,000

• Discount on reissue 2 / 4

© Pearson Education Limited 2019 6Sangster, Frank Wood’s Business Accounting 2, 14e, Solutions Manual Answer to Question 2.7A  BA 2 Grobigg Ltd Application and Allotment Cash: r eturn of unsuccessful Cash: 180,000 × 0.75135,000   application monies 8,000 × 0.75 6,000 Share capital: Due on application Cash: Balance due on allotment13,500   and allotment 150,000 × 0.80 120,000 Share premium 150,000 × 0.15 22,500  

148,500 148,500

Call

Share capital 150,000 × 0.20 30,000 Cash: 149,600 × 0.2029,920

Forfeited shares 80

30,000 30,000

Forfeited Shares Call 80 Share capital400

Share capital 400 Cash: 400 × 0.90360

Share premium 280

760 760

Share Premium Application and allotment22,500 Forfeited shares280 Share Capital Forfeited shares 400 Application and allotment120,000 Balance c/d 150,000 Forfeited shares400 Call 30,000

150,400 150,400

Answer to Question 3.2A  BA 2 (a) Dr Cr (A1) Bank 7,000 (A2) Preference share applicants 7,000 Cash received from applicants (B1) Preference share applicants 7,000 (B2) Preference share capital 7,000 Preference shares allotted (C1) R etained profits 3,000 (C2) Capital redemption reserve 3,000 Part of purchase price of shares not covered by new issue to comply with Companies Acts (D1) Ordinary share capital 10,000 (D2) Ordinary share purchase 10,000 Shares being purchased (E1) Ordinary share purchase 10,000 (E2) Bank 10,000 Payment made for share purchase 3 / 4

© Pearson Education Limited 2019 7Sangster, Frank Wood’s Business Accounting 2, 14e, Solutions Manual Balances EffectBalances before Dr Crafter Net assets (except bank) 31,00031,000 Bank 16,000 (A1) 7,000 (E2) 10,000 13,000

47,000 44,000

Preference share capital 8,000 (B2) 7,00015 ,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) 3,0003 ,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 Cr (A1) Ordinary share capital 12,000 (A2) Ordinary share purchase 12,000 Shares being purchased (B1) R etained profits 2,400 (B2) Ordinary share purchase 2,400 Premium on purchase of shares not previously issued at premium (C1) R etained profits 12,000 (C2) Capital redemption reserve 12,000 Transfer because shares purchased out of distributable profits (D1) Ordinary share capital 14,400 (D2) Bank 14,400 Payment of redemption Balances EffectBalances before Dr Cr after Net assets (except bank) 31,000 31,000 Bank 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) 12,00012 ,000 Share premium 4,000 4,000

32,000 32,000

(C1) 12,000

Retained profits 15,000 (B1) 2,400 600 47,000 32,600

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