Question 1 Starsky plc currently has the following capital structure: f 800,000 ordinary shares of 1 800,000 Share premium account 210,000 Retained earnings 2,400,000 Shareholders' equity 3,410,000 The Finance Director is proposing to make a bonus issue of shares on a '1 for 2' basis. Required Explain TWO reasons which may explain why Starsky plc's Finance Director wants to make this bonus issue. (4 marks) (maximum 200 words) Question 2 Huggy Ltd is currently showing trade receivables of 858,000 in its trial balance as at 30th June 2021. One of the company's customers has just gone bankrupt, owing the company 38,000. Recovery of this debt is not expected, and an adjustment should be made. Huggy Ltd wishes to maintain an allowance for receivables of 10% against unknown bad and doubtful debts. As at 30th June 2020, the provision for doubtful debts was 62,000. (a) Calculate Huggy Ltd's bad debt expense charge for the year ended 30th June 2021. (3 marks) (b) State, and briefly explain, the accounting concept demonstrated by the treatment of bad and doubtful debts in part (a). (2 marks) (maximum for (b) 100 words)