Warle Limited provided the following information after the calculation of the profit for the year ended 30 April 2015. Profit for the year ended 30 April 2015 Authorised share capital: $1 Ordinary shares Called up share capital: $1 Ordinary shares Interim dividend paid General reserve Retained profits 1 May 2014 $ 86000 100000 100000 3000 20000 14000 Additional information The directors have: 1 transferred $50000 to the general reserve 2 paid a final ordinary shares dividend of $0.15 per share. REQUIRED

Mark scheme

Marking points from the official mark scheme (May/June 2015). The mark or mark type is shown in brackets.

1. [1] (a) Profit for the year Retained Profits 86000
2. [1] Profit for the year Total 86000
3. [1] Transfer to general reserve General Reserve 50000
4. [1] Transfer to general reserve Retained Profits (50000)
5. [1] Transfer to general reserve Total 0
6. [1] Dividend paid (interim) Retained Profits (3000)
7. [1] Dividend paid (interim) Total (3000)
8. [1] Dividend paid (final) Retained Profits (15000)
9. [1] Dividend paid (final) Total (15000)
10. [1] Balance at 30 April 2015 General Reserve 70000
11. [1] Balance at 30 April 2015 Retained Profits 32000
12. [1] Balance at 30 April 2015 Total 202000
13. [1] (b) Share capital Ordinary shares of $1 each 100000
14. [1] General reserve 70000
15. [1] Retained profits 32000
16. [1] Total Reserves 102000
17. [1] Shareholders' funds 202000 (1of)
18. [1] (c) Preference shares: Paid dividend
19. [1] Debentures: Paid interest
20. [1] Preference shares: Part of company equity/share capital
21. [1] Debentures: Loans to the company/loan capital
22. [1] Preference shares: Generally no set repayment date/may be redeemable
23. [1] Debentures: Set redeemable date
24. [1] Preference shares: May be cumulative dividend
25. [1] Debentures: Interest must be paid even if losses are incurred
26. [1] (d) Retain cash in the business/to retain working capital
27. [1] Retain profit for future use such as future dividend payments
28. [1] Build reserves for future non-current asset purchase
29. [1] (e) Consistency in preparing accounts in different countries
30. [1] Accounting information can be relied upon although prepared in different countries
31. [1] Standard framework of preparation in different countries
32. [1] Comparison of information facilitated, although accounts are prepared in different countries.