B Limited had the following balances in the books at 30 April 2017. $ Retained profits 1 May 2016 410000 General reserve 1 May 2016 75000 Debentures (repayable 30 June 2020) 80000 Issued share capital ordinary shares $1 each 200000 Interim dividend paid on ordinary shares 10000 Profit for the year ended 30 April 2017 90000 Additional information 1 On 1 May 2016 an additional 50000 ordinary shares of $1 each had been issued. 2 On 30 April 2017 the directors: transferred $50000 to the general reserve paid a final ordinary dividend of $0.10 per share. REQUIRED

Mark scheme

Marking points from the official mark scheme (May/June 2017). The mark or mark type is shown in brackets.

1. [1] Share issues 50 000 (1)
2. [1] Profit for the year 90 000 (1)
3. [1] Transfer to general reserve 50 000 (1)
4. [1] Transfer to general reserve (50 000) (1)
5. [1] Dividend paid(interim) (10 000) (1)
6. [1] Dividend paid (final) (20 000) (1)
7. [1] Balance at 30 April 2017 - Ordinary share capital 200 000 (1 o/f)
8. [1] Balance at 30 April 2017 - General reserve 125 000 (1 o/f)
9. [1] Balance at 30 April 2017 - Retained profits 420 000 (1 o/f)
10. [1] Balance at 30 April 2017 - Total 745 000 (1 o/f)
11. [1] Ordinary shares of $1 each 200 000 (1)
12. [1] General reserve 125 000 (1)of
13. [1] Retained profits 420 000 (1)of
14. [1] Total equity 745 000 (1) w+f
15. [1] Debentures 80 000 (1)
16. [1] Total 825 000 (1)of
17. [1] If business wound up receive funds after liabilities and preference shares (1)
18. [1] If business wound up receive funds after liabilities (1)
19. [1] Second call on profits for dividend (1)
20. [1] First call on profits for dividend (1)
21. [1] No maximum dividend (1)
22. [1] Maximum percentage dividend (1)
23. [1] Voting rights (1)
24. [1] Not normally voting rights (1)
25. [1] Retains funds in the business (1)
26. [1] Funds retained for major expenditure such as purchasing non-current assets. (1)
27. [1] Profits 'ploughed back' for business to grow. (1)
28. [1] Profits held for emergencies / contingencies (1)