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Dear John,
For question a(i), the Gupture VC exercises its rights and Flufftort Co has to buy back its shares at par which is 10m. However, the cash available is only 7.6m. Did Flufftort buy back the shares using cash? if yes, how did Flufftort pay Gupture VC the remaining 2.4m?
For question a(ii), how to get the 5m for cash from the SOFP?
The question says that the retained earnings for 2016 (2.4M) is the same as the increase in cash for the year. 2.4M + 7.6M = 10M
For a(ii), the 5M is (as the answer says) simply the balancing figure. The missing figure so as to make the statement add up 🙂
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