Accounting 9706 · AS & A Level · Preparation of financial statements
Preparation of financial statements — practice question
On 1 January 2022, the directors of J Limited carried out a bonus issue of two ordinary shares for every three ordinary shares held. An extract from the company’s statement of financial position immediately after the bonus issue is shown below.
(a)[5]
Prepare an extract from the statement of financial position just before the bonus issue, showing the equity section.
(b)[5]
Calculate the difference in the amount of dividend received by Hassan, comparing the dividend at 31 March 2022 with the dividend at 31 March 2021.
(c)[2]
State two ways in which capital reserves and revenue reserves differ.
(d)[3]
State three reasons why the directors of a company might lower the total dividends payable.
Worked solution & mark scheme
This 15-mark question has a full step-by-step worked solution and mark scheme.