A-LevelAccountingCompany Accounts / EquityFeb/Mar 2024Paper 1 Q191 Mark
The trial balance of a company at 31 December at the end of year 1 included the following amounts. $: Ordinary share capital ($0.50 shares) 800 000 Share premium 200 000 Retained earnings 1 000 000 On 1 January in year 2 the company made a rights issue of 400 000 shares at a premium of $0.70 per share. This was fully taken up. On 1 July in year 2 the company issued bonus shares at the rate of one new share for every four held. The policy is to maintain reserves in their most flexible form. What is the balance on the share premium account after these transactions?
A$230 000
B$330 000
C$355 000
D$480 000
✓ Correct Answer
The correct answer is A: $230 000
📋 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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