Examination Questions

System
System Posts: 100,534 🤖 Admin 🤖
edited June 18 in AAT student discussion
I was wondering if anyone can explain this examination question.

(a) The proceeds of issue of 4000,000 50p shares at £1.10 per share, credited from the cash book.

All I want to know is how would one interpret this?

I really appreciate this.

Comments

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Examination Questions

    Not 100% sure, but i'd go with this;

    4,000,000 x 0.50 = 2,000,000
    4,000,000 x 1.10 = 4,400,000

    Proceeds = 4,400,000 - 2,000,000

    The shares cost you 50p each and you bought 4 million of them (total cost 2 million).

    When they were sold, they raised 4.4 million, but only 2.4 million of it was profit as they cost 2 million in the first place.

    Would i be right?
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Examination Questions

    Yea Share Capital would be £2,000,000
    Share Premium would be £2,400,000

    but how do we know what has been posted to the ledgers.

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