December sample question 4

This topic has 1 reply, 2 voices, and was last updated 6 years ago by Stephen Widberg.

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February 29, 2020 at 1:04 pm #563547
Ibra@2605
Member
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Guidance buys back its shares for cash and cancelled the 25M shares at $1.20 per shares.

Logically the double entry is
Dr equity 30
Cr cash 30

In the answer it appears that equity and assets has increased by 30m.

Please advise.
February 29, 2020 at 7:08 pm #563586
Stephen Widberg
Keymaster
- Topics: 17
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Redemption has already been accounted for.

Question is asking what ratios would have been like if we ignored the effect of the share redemption.

Horrible!
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