Plants Limited is looking to expand its operations in the year to 31 October 2020, but needs to raise additional finance to do so. The company proposes raising £500,000 by issuing 200,000 ordinary shares on 1 May 2020. Profits for the year to 31 October 2020 are expected to be £90,000. An interim ordinary dividend of 15 pence per share will be paid on 15 April 2020 and a final ordinary dividend of 25 pence per share will be paid on 15 October 2020.

Required

Using the information above, the information from Question 5.4 and the answer to Question 5.4:

(a) Calculate the amounts to be added to ordinary share capital and share premium in the equity section of the statement of financial position in respect of the new issue of ordinary shares on 1 May 2020.

(b) Calculate the total dividends, both ordinary and preference, to be paid in the year to 31 October 2020.

(c) Calculate the expected balance on retained earnings at 31 October 2020 after dividends for the year have been paid.

Data from Exercises 5.4.

Plants Limited runs a garden centre business selling garden plants and products to the public from its busy edge of town site. In the year to 31 October 2019, Plants Limited’s issued share capital consists of 100,000 ordinary shares of 50 pence each and 100,000 preference shares of £1 each. The preference share dividend rate is 6%. Preference dividends are payable on 31 October each year. An interim dividend of 10 pence per share was paid on the ordinary share capital on 15 May 2019 and the directors paid a final ordinary dividend of 20 pence per ordinary share on 15 October 2019.