Accounting 9706 · AS & A Level · Preparation of financial statements

Preparation of financial statements — practice question

An excerpt from a statement of changes in equity for the year ended 31 December 2016 is presented below. Opening balance at the beginning of the year: ordinary share capital $50\,000$, share premium $3000$, retained earnings $35\,000$. Profit for the year: retained earnings $9000$. Over the course of 2016 the following transactions took place, although they had not yet been recorded. 1. $10\,000$ ordinary shares of $1$ each were issued at $1.50$. 2. An interim dividend of $2000$ was paid. 3. A final dividend of $3000$ was proposed. What are the closing balances at 31 December 2016?

  • Aordinary share capital $60\,000$, share premium $8000$, retained earnings $39\,000$
  • Bordinary share capital $60\,000$, share premium $8000$, retained earnings $42\,000$
  • Cordinary share capital $65\,000$, share premium $3000$, retained earnings $39\,000$
  • Dordinary share capital $65\,000$, share premium $3000$, retained earnings $42\,000$

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