Question

000 0 counts and QUESTION CHAPTER 5: COMPANY ACCOUNTS. 1: (30 MARKS) LLC'S: SHARE ISSUE/APPROPRIATION A/C. BALANCE SHEET EXTRACE Markham Green Gold Ltd specializes in the Production of fruits and Vegetables. The company is his to purchase an oxi hectares of land. The authorized share capital of the company was 1,000,000 ordinary shares at K1 each 500,000 5% Preference shares at K2 each In order to raise the funds on 1 January 2017, the company made an issue of 290 000 Ordinary shares #56 sach and 75.00 2% debentures, in All the share and debentures were fully subscribed At the end of the first half of the company's business year, the accountant provided you with the following balanc Retained Profits Ordinary shares at K1 each 5% Preference shares General Reserves 2% debentures Share Premium Net Income ● bal 6/forb150.000 K K1.500 500 K1560 560 300,000 100,000 125,000 140,000 - The Accountant informs you that debenture Interest has not been included in calculating Net Income. The board of Directors has declared the following appropriation of profits: K20,000 to be transferred to general reserve K50,000 to be transferred to fixed assets replacement reserve Ordinary dividend of K0.50 per share to be paid o sot KL or SOA Payment of the Preference dividend 5/2 b) Prepare the Capital Reserve section of the Markham Green Gold Ltd.'s Statement of Financial Position (Balance a) Prepare a Statement to show the appropriation of profits for the Six (6) months ending June 20, 2017 Preet) as at 30th June 2017) (Extract of of only) ital from external party​

Answer 1

Here is a summary of the company accounts for Markham Green Gold Ltd.:

Share Capital

Authorized share capital: 1,000,000 ordinary shares at K1 each and 500,000 5% preference shares at K2 each

Issued share capital: 290,000 ordinary shares at K1 each and 75,000 2% debentures at K560 each

Reserves

General reserves: K300,000

Share premium: K100,000

Fixed assets replacement reserve: K125,000

Net Income

K140,000

Debenture Interest

Debenture interest has not been included in calculating net income.

Appropriation of Profits

K20,000 to be transferred to general reserve

K50,000 to be transferred to fixed assets replacement reserve

Ordinary dividend of K0.50 per share to be paid

Payment of the preference dividend 5/2

Statement of Financial Position

Account Debit Credit

Share capital 1,000,000

Reserves 525,000

Debentures 140,000

Net income 140,000

Total 140,000 1,665,000

Statement of Appropriation of Profits

Account Amount

Transfer to general reserve K20,000

Transfer to fixed assets replacement reserve K50,000

Ordinary dividend K145,000

Preference dividend K12,500

Total K227,500