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

Preparation of financial statements — practice question

W Limited has been operating for a number of years and is now planning to enlarge its activities and start trading overseas by buying a new warehouse priced at $550\,000$.
(a)[2]

Explain how share premium comes about.

(b)[3]

Calculate how much finance must be obtained through the issue of the debenture.

(c(i))[9]

Prepare the statement of changes in equity for the year ended 31 March 2017 (a total column is not required).

(c(ii))[2]

Prepare any note supporting the financial statements for the proposed dividend.

(d)[9]

Recommend whether the directors ought to fund the planned expansion through loans or rights issues. Justify your choice with suitable calculations.

Worked solution & mark scheme

This 25-mark question has a full step-by-step worked solution and mark scheme. One marking point: Shares issued above nominal value

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