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

Preparation of financial statements — practice question

F Limited is a major retail business. On 1 February 2016, it asked for applications for 50 000 ordinary shares of $1$ each at an issue price of $1.20$. Demand came in for 65 000 shares. Every payment received was first entered in the bank account and in a share issue holding account until allotment took place.
(a)[10]

Prepare the following ledger accounts so that they show **all** transactions connected with the share issue. Dates are not needed.

(b)[8]

Prepare the statement of changes in equity for F Limited for the year ended 30 June 2016.

(c)[2]

Explain one difference between debentures and ordinary shares.

(d)[4]

Advise the directors which method of raising the finance you would recommend. Give reasons for your answer.

(e)[2]

Define the term ‘revenue expenditure’.

(f)[4]

Prepare a statement to show the total amount of capital expenditure to appear in the financial statements of the business in respect of the extension of the factory premises.

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