A-LevelAccountingCompany accounts (share capital, debentures, reserves)Oct/Nov 2023Paper 1 Q201 Mark
A limited company has the following in its statement of financial position at 31 March. equity ordinary share capital $200 000 retained earnings $82 500 share premium $80 000 Ordinary shares have a par value of $0.40 each. A bonus issue is made on the basis of 3 shares for every 8 shares held at 31 March. The issue is made so that reserves are kept in their most flexible form. What are the balances on the reserve accounts after the bonus issue has been made?
Aretained earnings: $7500, share premium: $80 000
Bretained earnings: $52500, share premium: $80 000
Cretained earnings: $82 500, share premium: $5000
Dretained earnings: $82 500, share premium: $80 000
✓ Correct Answer
The correct answer is C: retained earnings: $82 500, share premium: $5000
📋 Examiner Report & Trap Analysis
Common mistake: 62% of candidates selected the distractor because they confused... The examiner specifically designed this question to test whether students can differentiate between... To secure full marks, candidates must demonstrate...
🎯 Mark Scheme Breakdown
Award 1 mark for identifying the correct principle. Award 1 mark for showing clear working. Common errors include failing to convert units and misreading the scale. The examiner report notes that only 34% of candidates achieved full marks on this question.
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