A company’s balance sheet appears as follows:

Required:

(a) If £10,000 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), £10,000 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.

Transcribed Image Text:

Net assets (except bank) 40,000 Bank 48,000 88,000 Preference share capital 20,000 Ordinary share capital 50,000 Non-distributable reserves 10,000 80,000 Profit and loss 8,000 88,000