• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
Free ACCA & CIMA online courses from OpenTuition

Free ACCA & CIMA online courses from OpenTuition

Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams

  • ACCA
  • CIMA
  • FIA
  • OBU
  • Books
  • Forums
  • Ask AI
  • Search
  • Register
  • Login
  • ACCA Forums
  • Ask ACCA Tutor
  • CIMA Forums
  • Ask CIMA Tutor
  • FIA
  • OBU
  • Buy/Sell Books
  • All Forums
  • Latest Topics

20% off ACCA & CIMA Books

OpenTuition recommends the new interactive BPP books for September 2025 exams.
Get your discount code >>

Equity

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FA – FIA FFA › Equity

  • This topic has 3 replies, 2 voices, and was last updated 7 years ago by John Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • June 11, 2018 at 2:28 pm #458311
    learnmore86
    Participant
    • Topics: 3
    • Replies: 4
    • ☆

    Hi again. I was reviewing chapter 13 in your website. Then I tried to understand my previous question which you answered but still I m not sure how to calculate it.
    That’s my problem

    We have this INFO in trial balance

    Ordinary shares 50c. 8,000
    10% irredeemable preference shares $1 9,000
    10% loan notes 8,000
    Share premium 3,000
    Preference dividend paid 900
    Interim ordinary dividend paid 1,600

    We want to manage Equity in SOFP

    You answered

    The balance on the share premium account of $8,000 is the proceeds of issue of 4,000 shares of $0.50 each.

    Therefore $2,000 should be transferred to share capital and the other $6,000 transferred to share premium.

    Now I’m trying to understand it

    Ordinary shares 50c. Credit 8000
    Means number of shares were
    Nominal value = 0.5
    $8000÷0.5=16000

    In T account in share capital account
    We have CR $8000

    And now they added
    ?A final ordinary dividend of 10c per share is to be proposed.
    Proposed share won’t write down any where in statement
    So I don’t do anything?
    And T account for premium share
    Stay the same
    Cr $3000

    But we have money in suspense account which represents the proceeds from the issue of 4000 ordinary share

    I’m confused. I can’t get it.

    I need to understand it. I can’t leave it.

    Please could you guide me more?

    That’s my understanding :
    I know
    company Nominal value was 50c and we have cr $8000 in share capital a/c

    8000÷0.5=16000
    Cash: Dr $8000
    Share capital : Cr $8000

    10% × 16000=1600
    1600×0.5($1-0.5)=800 irredeemable preference shares
    Cash: Dr. $8000 + $1600
    Share capital : $8000 + $800
    Share premium :$3000 (we had in T balance)+ $800

    ?please could you guide me more? Thank you

    June 11, 2018 at 4:05 pm #458337
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54699
    • ☆☆☆☆☆

    In your original question, there was a balance of $8,000 on the suspense account that was from the issue of shares. So the entry that will have made would have been Dr Cash Cr Suspense account.

    It related to the issue of 4,000 shares. Since the shares have a nominal value of $0.50, then 4,000 x 0.50 = $2,000 should go to the share capital account (making the total share capital 8,000 + 2,000 = $10,000).

    The extra $6,000 from the issue of shares (8,000 – 2000) is the share premium. This should go to the share premium account, making the total on share premium 9,000 (3,000 + 6,000).

    So the correcting entry is:
    Dr Suspense account 8,000
    Cr Share capital account 2,000
    Cr Share premium account 6,000

    The balances on the preference shares account is not affected (nor is the balance on the loan notes account, but obviously this is not equity anyway).

    You are correct that the proposed dividend is not relevant (because it has not been paid).

    I have forgotten where you said you found this question, but is there not an answer in the same book?

    June 11, 2018 at 4:54 pm #458351
    learnmore86
    Participant
    • Topics: 3
    • Replies: 4
    • ☆

    HI. Thank you for your full detailed answer. This question is in the Kaplan F3. Chapter 17. Test 1.
    There is an answer under statement of changes in equity (page 319), but I was so confused to understand that it’s an adjustment from the Trial balane and actually there is some part of the answer in the question(in the Trial balance ). I thought I have to recalculate and write down again.

    The answer in the book says

    ?the issue of 400 shares for $8000 means they were issued at $2 each. If ….

    My apology , I became blind and I was only thinking of $2 ??how, from where .???..

    However, now I understood it

    Thank you for your help again.

    June 12, 2018 at 7:53 am #458414
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54699
    • ☆☆☆☆☆

    You are welcome 🙂

  • Author
    Posts
Viewing 4 posts - 1 through 4 (of 4 total)
  • The topic ‘Equity’ is closed to new replies.

Primary Sidebar

Donate
If you have benefited from our materials, please donate

ACCA News:

ACCA My Exam Performance for non-variant

Applied Skills exams is available NOW

ACCA Options:  “Read the Mind of the Marker” articles

Subscribe to ACCA’s Student Accountant Direct

ACCA CBE 2025 Exams

How was your exam, and what was the exam result?

BT CBE exam was.. | MA CBE exam was..
FA CBE exam was.. | LW CBE exam was..

Donate

If you have benefited from OpenTuition please donate.

PQ Magazine

Latest Comments

  • mrjonbain on ACCA BT Chapter 6 – Some legal obligations – Questions
  • Ken Garrett on ACCA BT Chapter 6 – Some legal obligations – Questions
  • Ken Garrett on The nature and structure of organisations – ACCA Paper BT
  • OmarAlbeity on ACCA BT Chapter 6 – Some legal obligations – Questions
  • Salimbek909 on The nature and structure of organisations – ACCA Paper BT

Copyright © 2025 · Support · Contact · Advertising · OpenLicense · About · Sitemap · Comments · Log in