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Nov2013/P43/Q2: © UCLES 2013 9706/43/O/N/13

The document summarizes the financial transactions of Voronez plc over two years. It provides details on share issuances, dividends paid, bonus issues, rights issues, and share repurchases. It then asks to calculate amounts for statement of financial position line items for ordinary share capital, preference share capital, share premium, retained earnings, and capital redemption reserve based on these transactions. It also asks questions about when a company cannot pay dividends and the purpose of a capital redemption reserve.

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Abid faisal Ahmed
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27 views2 pages

Nov2013/P43/Q2: © UCLES 2013 9706/43/O/N/13

The document summarizes the financial transactions of Voronez plc over two years. It provides details on share issuances, dividends paid, bonus issues, rights issues, and share repurchases. It then asks to calculate amounts for statement of financial position line items for ordinary share capital, preference share capital, share premium, retained earnings, and capital redemption reserve based on these transactions. It also asks questions about when a company cannot pay dividends and the purpose of a capital redemption reserve.

Uploaded by

Abid faisal Ahmed
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Nov2013/P43/Q2

2 On 1 July 2011 Voronez plc issued 120 000 ordinary shares of $1 each at a premium of $0.10
per share and 40 000 5% redeemable preference shares of $1 each at a premium of $0.15 per
share.

The company made a profit for the year ended 30 June 2012 of $100 000.

On 30 June 2012 the company:

1 paid the dividend on the redeemable preference shares (treated as a financing cost);

2 paid a dividend of $0.10 per share on the ordinary shares;

3 made a bonus issue of one new fully paid ordinary share for every 4 shares held;

4 made a rights issue of one new ordinary share for every 6 shares held after the bonus
issue at a price of $1.60 per share. The rights issue was fully subscribed.

REQUIRED

(a) Calculate the amounts which will be included in the company’s statement of financial position
at 30 June 2012 for each of the following:

Ordinary share capital,

Preference share capital,

Share premium,

Retained earnings. [17]

Additional information

The company made a profit for the year ended 30 June 2013 of $86 000 before paying any
dividends.

On 30 June 2013 the company:

1 paid the dividend on the redeemable preference shares;

2 purchased 80 000 of its own ordinary shares at a price of $1.125 each and cancelled
them.

© UCLES 2013 9706/43/O/N/13


5

REQUIRED

(b) Calculate the amounts which will be included in the company’s statement of financial position
at 30 June 2013 for each of the following:

Ordinary share capital,

Share premium,

Capital redemption reserve,

Retained earnings. [12]

(c) Explain the circumstances in which the directors of a company would be unable to pay a
dividend on ordinary shares. [5]

(d) (i) State one reason why a capital redemption reserve is created. [2]

(ii) Explain the way in which you have created the capital redemption reserve. [2]

(iii) State for what purposes a capital redemption reserve may be used. [2]

[Total: 40]

© UCLES 2013 9706/43/O/N/13 [Turn over

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