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Hi Sir,
Hope you’re doing well. In the BPP revision kit 2019-2020 question 19.1 task 2
I’m not able to understand how the proceeds are 5,000,000,
In task 3 also I’m quite not understanding the workings for finding share capital i.e 8,000,000 (6,000,000+(4,000,000 X50c)). How 6,000,000? Kindly,explain.The proceeds are not 5,000,000 (and that is not what the answer says 🙂 )
The suspense account on the SOFP is 5,000,000.
Part of this is the proceeds from the issue of shares, which is 4,000,000 x $1.10 = $4,400,000.
The balance is the proceeds of sale of plant, and so the proceeds are 5,000,000 – 4,400,000 = $600,000.The share capital on the SOFP is 6,000,000. In addition they issued an extra 4,000,000 50c shares and so the correct share capital is $8,000,000.
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