A summary of the statement of financial position of Doxin plc, as at 31 December 20X0, is
Question:
During 20XI, the company:
(i) Issued 200,000 ordinary shares of £1 each at a premium of I0p per share (a specific issue to redeem preference shares).
(ii) Redeemed all preference shares at a premium of 5%. These were originally issued at 25% premium.
(iii) Issued 4,000 7% debentures of £100 each at £90.
(iv) Used share premium, if any, to issue fully paid bonus shares to members.
(v) Made a net loss of £500,000 by end of year which affected the bank account.
Required:
(a) Show the effect of each of the above items in the form of a moving statement of financial position (i.e. additions/deductions from original figures) and draft the statement of financial position of 31 December 20XI.
(b) Consider to what extent the interests of the creditors of the company are beingprotected.
Debenture DefinitionDebentures are corporate loan instruments secured against the promise by the issuer to pay interest and principal. The holder of the debenture is promised to be paid a periodic interest and principal at the term. Companies who...
Step by Step Answer:
Financial Accounting and Reporting
ISBN: 978-0273744443
14th Edition
Authors: Barry Elliott, Jamie Elliott