Assignment Problem:
The summarized statement of financial position of Cloud Ltd at a particular point of time is as follows,
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Statement of the Financial Position
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Particulars
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Amount in Omani Rial (OMR)
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Net Assets Value (Various assets less Liabilities)
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857,500
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Equity
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Share Capital (200,000 shares of OMR 1 each)
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250,000
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Share premium account
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75,000
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Revaluation Reserve
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92,500
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Retained Earnings
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170,000
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Total Equity
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587,500
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Transaction - Without any other transactions occurring at the same time, the company made a one for five rights share issue at OMR 3.75 per share payable in cash. All shareholders took up their rights. Immediately afterwards, the company made a one for two bonus issue.
You are required to do the following things;
Show the statement of financial position immediately following the bonus issue, assuming that the directors wanted to retain the maximum dividend payment potential for the future.
Ahmed has 250 equity shares of the aforesaid company before Right and Bonus issue. Now what will be total shareholding of Ahmed after bonus and right issues? What is the total value of Ahmed's share before and post right and bonus issue?
Question - The draft statement of financial position of season's plc at 30 November 2019 was as follows:
RO 000 RO 000
Ordinary shares of £1 each, fully paid 15,000
Product development costs 1,750
12% preference shares of £1 each, fully paid 10,000 Sundry assets 40,212
Share premium 5,000 Cash and bank 6,813
Retained (distributable) profits 5,750
Payables 13,025
48,775 48,775
Preference shares of the company were originally issued at a premium of RO 0.025 per share. The directors of the company decided to redeem these shares at the end of December 2019 at a premium of RO 0.05 per share. They also decided to write off the balances on development costs and discount on debentures (see below).
All write-offs and other transactions are to be entered into the accounts according to the provisions of the Companies Acts and in a manner financially advantageous to the company and to its shareholders.
The following transactions took place during November 2019:
(a) On 5 November the company issued for cash 3,000,000 12.5% debentures of RO I each at a discount of 3 V4 %.
(b) On 6 November the balances on development costs and discount of debentures were written off.
(c) On 14 November the company issued for cash 7,500,000 ordinary shares at a premium of RO 0.125 per share. This was a specific issue to help redeem preference shares.
(d) On 29 November the company redeemed the 12% preference shares at a premium of RO 0.0625 per share.
(e) On 30 November the company made a bonus issue, to all ordinary shareholders, of one fully paid ordinary share for every 25 shares held.
(f) During November the company made a net profit of RO 343,750 from its normal trading operations. This was reflected in the cash balance at the end of the month.
Required:
(a) Write up the ledger accounts of Season plc to record the transactions for November 2019.
(b) Prepare the company's statement of financial position as at 30 November 2019.