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preparation of financial accounts

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FA – FIA FFA › preparation of financial accounts

  • This topic has 1 reply, 2 voices, and was last updated 4 years ago by John Moffat.
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  • May 25, 2021 at 8:57 pm #621766
    shaunak22
    Participant
    • Topics: 220
    • Replies: 41
    • ☆☆☆

    Extracts from the accounting records of Andratx Co relating to the year ended 31 December
    20X6 are as follows:

    Revaluation surplus $230,000
    Equity interim dividend paid $12,000
    Profit before tax $178,000
    Estimated tax liability for year $45,000
    8% $1 Preference shares $100,000
    Under provision for tax in previous year $5,600
    Proceeds of issue of 2,000 $1 equity shares $5,000
    Final equity dividend proposed $30,000

    What was the total of equity reported in the statement of changes in equity at
    31 December 20X6?

    A $312,400
    B $356,000
    C $348,000
    D $342,400

    the answer is D but htey have not taken the preference share capital into consideration in the statement of changes in equity why is that dont we normally consider preference share capital when preparing statment of changes in equity and why isnt it considered here?

    May 26, 2021 at 9:07 am #621792
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54699
    • ☆☆☆☆☆

    The equity shares are the ordinary shares not the preference shares (just as they are referred to in the question).

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