- 15 Marks
FR – L2 – Q55 – Financial Instruments
Calculate capital, reserves, and liabilities for Jordana PLC after share issues and preference share transactions in Year 1.
Question
On 1 January Year 1 Jordana PLC has the following capital and reserves.
| Equity | GH₵ |
|---|---|
| Share capital (1 million ordinary shares) | 1,200,000 |
| Retained earnings | 5,670,300 |
| 6,870,300 |
During Year 1 the following transactions took place.
- 1 January: An issue of GH₵100,000 8% GH₵1 redeemable preference shares at a premium of 60%. Issue costs are GH₵2,237. Redemption is at 100% premium on 31 December Year 5. The effective rate of interest is 9.5%.
- 31 March: An issue of 300,000 ordinary shares at a price of GH₵1.30 per share. Issue costs, net of tax benefit, were GH₵20,000.
- 30 June: A 1 for 4 bonus issue of ordinary shares.
Profit for the year, before accounting for the above, was GH₵508,500. The dividends on the redeemable preference shares have been charged to retained earnings.
Required
Set out capital and reserves and liabilities resulting from the above on 31 December Year 1.
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