Shareholders Equity Quiz Questions 2014 ANS Essays

2322 WordsApr 29, 201510 Pages
SHAREHOLDERS’ EQUITY QUIZ QUESTIONS 1. What is a share? (1 mark) Answer: A share is an unit of ownership that represents an equal proportion of a company's capital. It entitles its holder (the shareholder) to an equal claim on the company's profits and an equal obligation for the company's debts and losses. 2. Identify two advantages of a private placement of shares as compared with a public issue. (1 mark) Answer: 1. The investor can get positive allotment. 2. The investor can get high number of shares. 3. The share value can be lower many a times. 4. The company doesn't need to provide as much disclosure to investors. 3. The shareholders of Quinninup Ltd hold 25 000 A class ordinary shares, fully paid at $4.50 each. On 17 April…show more content…
Shannon Ltd has the following equity at 30 June 2013: $ 86 000 ordinary shares @ $2.00, fully paid 172 000 57 000 ordinary shares @ $3.00, paid to $2.40 136 800 Calls in advance (7 000 shares) 4 200 Retained earnings 120 000 433 000 On 24 November 2013, the directors made the final call on the partly paid shares with monies due and payable on 31 December 2013. All monies were duly received. Required Prepare the journal entries to record the call, show all workings. (3 marks) Answer: Date Accounting Title Debit ($) Credit($) 24 Nov 2013 Call Share capital 34200 34200 (call of $0.6 per share on 57000 ordinary share) 24 Nov 2013 Calls in advance Call 4200 4200 (transfer calls in advance against call debt) 31 Dec 2013 Cash Call 30000 30000 (receipt of call money) 10. Under what circumstances may a company retain excess application monies? (2 marks) Answer: Excess monies may be retained if (i) The constitution allows (ii) There is a future call outstanding. Excess is transferred to Calls in advance account and treated as part of share capital. If

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