Kenmac Ltd has decided to purchase shares with a nominal value of \(£ 110,000\) (originally issued for \(£ 120,000\) ) for \(£ 140,000\). The purchase is to be funded out of distributable profits.

The statement of financial position of Kenmac Ltd immediately prior to the purchase of the shares is as follows:

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(a) Prepare journal entries to give effect to the above transaction.

(b) Prepare the statement of financial position of Kenmac Ltd immediately after the purchase.

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Net assets 950,000 Share capital (1 shares) 500,000 Share premium 250,000 Retained earnings 200,000 950,000