Type:
Solution Manual
Resource:
Frank Wood_s Business Accounting, Volume 2
Edition:
14th Edition
Author(s):
Frank Wood Alan Sangster
Solutions Manual Frank Wood’s Business Accounting 2 Fourteenth edition
Alan Sangster PhD, MSc, BA, CertTESOL, CA
For further instructor material please visit:
www.pearsoned.co.uk/wood
Sangster, Frank Wood’s Business Accounting 2, 14e, Solutions Manual
Answers Answer to Question 2.5A BA 2 (Dates omitted) (a)
Ordinary Share Capital Balance b/d Application and allotment First and final call
500,000 70,000 30,000 600,000
Balance b/d Amber
595,000 5,000 600,000
Forfeited shares (5,000 × £1) 5,000 Balance c/d 595,000 600,000 600,000 600,000
Balance c/d (b)
Share Premium Application and allotment Forfeited shares
Balance c/d 52,500 52,500 (c)
50,000 2,500 52,500
Application and Allotment
Bank refunds (75,000 × 65p) 48,750 Bank refunds re: 3 for 4 allotment (25,000 × 65p) 16,250 Ordinary share capital 70,000 Share premium 50,000 185,000
Bank (200,000 × 65p) Bank (100,000 × 55p)
185,000
(d)
130,000 55,000
First and Final Call Bank (95,000 × 30p) Forfeited shares (5,000 × 30p)
Ordinary share capital (100,000 × 30p) 30,000 30,000 (e)
Forfeited Shares
First and final call Amber Ltd Share premium
1,500 1,000 2,500 5,000
Ordinary share capital
5,000 5,000
( f )
28,500 1,500 30,000
Amber Ltd
Ordinary share capital
Bank (5,000 × 80p) Forfeited shares*
5,000
5,000 * Discount on reissue
5 .
4,000 1,000 5,000
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 application monies 8,000 × 0.75 6,000 Share capital: Due on application and allotment 150,000 × 0.80 120,000 Share premium 150,000 × 0.15 22,500 148,500
Cash: 180,000 × 0.75
135,000
Cash: Balance due on allotment
13,500
148,500 Call
Share capital 150,000 × 0.20
Cash: 149,600 × 0.20 Forfeited shares
30,000
30,000
29,920 80 30,000
Forfeited Shares 80 400 280 760
Share capital Cash: 400 × 0.90
400 360 760
Call Share capital Share premium
Share Premium
Application and allotment Forfeited shares
22,500 280
Share Capital Forfeited shares Balance c/d
400 150,000
Application and allotment Forfeited shares Call
150,400
120,000 400 30,000 150,400
Answer to Question 3.2A BA 2 (a) Dr (A1) Bank 7,000 (A2) Preference share applicants Cash received from applicants (B1)
Preference share applicants 7,000 (B2) Preference share capital Preference shares allotted (C1) Retained profits 3,000 (C2) Capital redemption reserve 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 Shares being purchased (E1)
Ordinary share purchase 10,000 (E2) Bank Payment made for share purchase
6 .
Cr 7,000
7,000
3,000
10,000
10,000
Sangster, Frank Wood’s Business Accounting 2, 14e, Solutions Manual
Balances Effect Balances before Dr Cr after 31,000 31,000 16,000 (A1) 7,000 (E2) 10,000 13,000 47,000 44,000
Net assets (except bank) Bank
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 (A1) Ordinary share capital 12,000 (A2) Ordinary share purchase Shares being purchased
Cr 12,000
(B1) Retained profits 2,400 (B2) Ordinary share purchase Premium on purchase of shares not previously issued at premium
2,400
(C1) Retained profits 12,000 (C2) Capital redemption reserve Transfer because shares purchased out of distributable profits
12,000
(D1) Ordinary share capital 14,400 (D2) Bank Payment of redemption
14,400
Balances Effect Balances before Dr Cr after 31,000 31,000 16,000 (D2) 14,400 1,600 47,000 32,600
Net assets (except bank) Bank
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
7 .