The following information relates to Makadini Group for the year ended 31 December 2013. (i) The balances
Question:
The following information relates to Makadini Group for the year ended 31
December 2013.
(i) The balances of the capital accounts and reserves on 31 December 2013
were as follows:
Ordinary share capital ($1 per share) 1 000 000
10% redeemable preference share capital ($1 per share) 200 000
Share premium 400 000
Revaluation reserve -
General reserve 20 000
Accumulated profit 1 000 000
) On 1 January 2013 Makadini Property was valued at $50 000
(iii) On 31 March 2013, 100 000 ordinary shares with a par value of $1 each were
issued at a premium of 20cents per share.
(iv) On June 30 2013 the total preference share capital was redeemed at par.
Shares were not issued to finance that redemption.
(v) On July 15, 2013 a fundamental error to the tune of $32 500 was discovered.
This error was corrected during 2013 (increase in net profit).
(vi) Consolidated net profit for the year amounted to $90 600 while a dividend
amounting to $35 000 was declared and paid on 31 December 2013.
(vii) Preliminary expenses amounting to $2 000 were written off against the share
premium during the year.
(viii) On 31 December 2013 $20 000 was transferred to the general reserve.
Required
Prepare the statement of changes in equity for the year ended 31 December 2013.
[25]
4. (a) Discuss the major considerations made in the preparation of financial
statements. [12]
(b) What are the objectives of financial statements? [5]
(c) Statement of cash flows require cash to be reported under three headings.
State the headings and explain what is included under each heading.
[8]
Canadian Income Taxation planning and decision making
ISBN: 9781259094330
17th edition 2014-2015 version
Authors: Joan Kitunen, William Buckwold