Exercises (a) to (e) are based on the following statement of financial position.

Note also that exercises (a) to (e) are independent of each other. They are not cumulative.

Required:
(a) A Rooney Ltd purchases £10,000 of its own ordinary share capital at par. To help finance this £7,000 preference shares are issued at par. Show the necessary journal entries and the statement of financial position after the transactions have been completed.
(b) A Rooney Ltd purchases £12,000 of its own ordinary shares at a premium of 20%. No new issue of shares is made for the purpose. It is assumed that the share premium account is in respect of the issue of preference shares some years before. Show the statement of financial position after the transactions have been completed, and also the supporting journal entries.
(c) A Rooney Ltd purchases all the preference share capital at par. These shares were not originally redeemable preference shares. There is no new issue of shares to provide funds. Show the requisite journal entries, and the closing statement of financial position when the transaction has been completed.
(d) A Rooney Ltd purchases £12,000 of its own ordinary shares at par, a new issue of £12,000 preference shares at par being made for the purpose. Show the journal entries needed and the statement of financial position after completing these transactions.
(e) A Rooney Ltd purchases £6,000 ordinary shares at a premium of 50%. They had originally been issued at a premium of 20%. There is an issue of £10,000 preference shares at par for the purpose.
Show the amended statement of financial position, together with the journal entries.

Transcribed Image Text:

Net assets (except bank) Bank Preference share capital Ordinary share capital Share premium Retained profits A Rooney Ltd Statement of Financial Position £ 31,000 16,000 47,000 8,000 20,000 4,000 32,000 15,000 47,000