Solutions Manual Frank Wood’s Business Accounting 2 Fourteenth Edition Alan Sangster

Solutions Manual Frank Wood’s Business Accounting 2 Fourteenth Edition Alan Sangster

Answers
Answer to Question 2.5A BA 2
(Dates omitted)
(a) Ordinary Share Capital
Forfeited shares (5,000 × £1) 5,000 Balance b/d 500,000
Application and allotment 70,000
Balance c/d 595,000 First and final call 30,000
600,000 600,000
Balance b/d 595,000
Balance c/d 600,000 Amber 5,000
600,000 600,000
(b) Share Premium
Application and allotment 50,000
Balance 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 refunds re: 3 for 4 Bank (100,000 × 55p) 55,000
 allotment (25,000 × 65p) 16,250
Ordinary share capital 70,000
Share 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 capital 5,000
Amber Ltd 1,000
Share premium 2,500
5,000 5,000
( f ) Amber Ltd
Ordinary share capital 5,000 Bank (5,000 × 80p) 4,000
 Forfeited shares* 1,000
5,000 5,000
* Discount on reissue
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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 × 0.75 135,000
 application monies 8,000 × 0.75 6,000
Share capital: Due on application Cash: Balance due on allotment 13,500
 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 × 0.20 29,920
 Forfeited shares 80
30,000 30,000
Forfeited Shares
Call 80 Share capital 400
Share capital 400 Cash: 400 × 0.90 360
Share premium 280
760 760
Share Premium
Application and allotment 22,500
Forfeited shares 280
Share Capital
Forfeited shares 400 Application and allotment 120,000
Balance c/d 150,000 Forfeited shares 400
 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) Retained 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
© Pearson Education Limited 2019
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Sangster, Frank Wood’s Business Accounting 2, 14e, Solutions Manual
Balances Effect Balances
before Dr Cr after
Net assets (except bank) 31,000 31,000
Bank 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 Cr
(A1) Ordinary share capital 12,000
(A2) Ordinary share purchase 12,000
Shares being purchased
(B1) Retained profits 2,400
(B2) Ordinary share purchase 2,400
Premium on purchase of shares not previously issued at premium
(C1) Retained 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 Effect Balances
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) 12,000 12,000
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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