Explain the effect on the accounting equation of the following transactions and decisions regarding dividends:

(a) The company pays a dividend of £20,000 during the accounting period.

(b) The directors recommend a dividend of £30,000 at the end of the accounting year. It will be paid following shareholder approval at the Annual General Meeting, held two months after the accounting year-end.

B12.3 [S]

The following is a summarised statement of financial position (balance sheet) of Nithsdale Ltd.

£000s Cash 20 Other assets less liabilities 320 340 Ordinary shares (400,000 of 25 pence each) 100 Share premium 40 Reserves of retained profit 200 340 The company is considering three possible changes to its capital structure:

(a) issue for cash 50,000 additional ordinary shares at £1 per share, fully paid; or

(b) make a 1 for 4 capitalisation issue of ordinary shares; or

(c) make a 1 for 5 rights issue at £3 per share.

Show separately the impact of each change on the statement of financial position (balance sheet) of the company.