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Hi,
for question b) iii in the answer part Appendix 3, for the reserves in Appendix 1. I wonder how you derive to $459.56. From your previous answers, I found that you did this
$1700 – $1200m + 350m – 309.56m
the $1200 is ($120m shares x $10)
How do you get $10 ? When the price of share capital is $1 per share and the current share price is $11 (based on question)??
The nominal value of the shares is $1 per share and they are bought back for $11 per share.
This is a financial accounts problem and you should remember from earlier exams that the double entry is to Cr Cash with $11, Dr Share capital with the nominal value of $1, and Dr Reserves with the remaining $10.
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