A summar y of the balance sheet of Doxin plc, as at 31 December 20X0, is given below;

During 20XI, the company:
(i) Issued 200,000 ordinar y shares of £I each at a premium of I0p per share (a specific issue to redeem preference shares).
(ii) Redeemed all preference shares at a premium of 5%. These were originally issued at 25%
premium.
(iii) Issued 4,000 7% debentures of £100 each at £90.
(iv) Used share premium, if any, to issue fully paid bonus shares to members.
(v) Made a net loss of £500,000 by end of year which affected the bank account.
Required:

(a) Show the effect of each of the above items in the form of a moving balance sheet (i.e. additions/
deductions from original figures) and draft the balance sheet of 31 December 20XI.

(b) Consider to what extent the interests of the creditors of the company are being protected.

Transcribed Image Text:

800,000 ordinary shares of 1 Assets other than bank (at book each 800,000 values) 1,500,000 300,000 6% preference shares of l each 300,000 Bank 200,000 General reserves 200,000 Payables 400,000 1,700,000 1,700,000