Blaze Ltd has decided to purchase shares with a nominal value of 110,000 (originally issued for...

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Blaze Ltd has decided to purchase shares with a nominal value of £110,000 (originally issued for £120,000) for £140,000. The purchase is to be funded out of distributable profits. The statement of financial position of Blaze Ltd immediately prior to the purchase of the shares is as follows: £ Net assets 950,000 Share capital (£1 shares) Share premium 500,000 250,000 Retained earnings 200,000 Required (a) (b) Prepare journal entries to give effect to the above transaction. Prepare the statement of financial position of Blaze Ltd immediately after the purchase. (c) Comment on the capitalisation of capital and revenue reserve of Blaze Ltd after the repurchase of its shares. Blaze Ltd has decided to purchase shares with a nominal value of £110,000 (originally issued for £120,000) for £140,000. The purchase is to be funded out of distributable profits. The statement of financial position of Blaze Ltd immediately prior to the purchase of the shares is as follows: £ Net assets 950,000 Share capital (£1 shares) Share premium 500,000 250,000 Retained earnings 200,000 Required (a) (b) Prepare journal entries to give effect to the above transaction. Prepare the statement of financial position of Blaze Ltd immediately after the purchase. (c) Comment on the capitalisation of capital and revenue reserve of Blaze Ltd after the repurchase of its shares.

Answer rating: 100% (QA)

Step 1 Introduction Treasury stock is acknowledged as the reacquired stock of a corporation which we... View the full answer