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Juice and More Bhd has an issued and paid-up capital of RM90,000,000 comprising 45,000,000 ordinary shares
fully paid. It embarked on a share buyback scheme. The shareholders at the recent AGM passed an ordinary
resolution to purchase 1,000,000 ordinary shares for immediate cancellation at a price of RM3.00 each. Below is
the statement of financial position of Juice and More Bhd before the shares were purchased.Non-current assets80,000,000
Net current assets30,000,000
= 110,000,000Equity
Issued share capital
45,000,000ordinary shares,fullypaid90,000,000
Retained profits 20,000,00
= 110,000,000Required:
Show the journal entries to effect the above transaction and prepare the statement of financial position after the
purchase is completed.My question is,I dont understand what does this phrase tell me “The shareholders at the recent AGM passed an ordinary
resolution to purchase 1,000,000 ordinary shares for immediate cancellation at a price of RM3.00 each.”Do explain this to me?
Although I will explain, this is not relevant for Paper FA. (I do suggest that you use a Revision Kit from one of the ACCA approved publishers – they are full of exam standard questions that are relevant for the exam syllabus.)
The phrase means that the company will buy 1,000,000 shares and will then cancel them. They will pay the shareholders 3RM per shares. The share capital will therefore be reduced by the nominal/par value of the 1,000,000 shares, and the extra will be debited to the reserves.
Thanks a lot Sir,if you dont mind me asking,what is the journal entries for the transaction?
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