A company’s balance sheet appears as follows:

Required:

(a) If £6,000 of the ordinary shares were purchased at par, there being no new issue of shares for the purpose, show the journal entries to record the transactions and the amended balance sheet.

(b) If, instead of (a), £6,000 ordinary shares were purchased at a premium of 100 per cent, there being no new issue of shares for the purpose, show the journal entries to record the transactions and the amended balance sheet.

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Net assets (except bank) Bank Preference share capital Ordinary share capital Non-distributable reserves Profit and loss £ 12,500 13,000 25,500 5,000 10,000 6,000 21,000 4,500 25,500