Corporate and Financial Accounting

Corporate and financial
accounting

Table of Contents
QUESTIONS...................................................................................................................................3
2...................................................................................................................................................3
3...................................................................................................................................................6

QUESTIONS
1.
(a) General entries
Cash A/c Debit $ 1,000,000
Share Application A/c cr $ 1,000,000
(Application received = 500000*2)
Share application A/c Db. $ 200000
Cash A/c Cr. $ 200000
(Remaining application needed to be returned)
(b) Ledger
Share application A/c
Date Particular Amount Date Particular Amount
31-06-2019 By share
application
1000000
1-08-2019 Top share
application
200000
31-08-2019 To bal c/f 800000
Cash A/c
Date Particular Amount Date Particular Amount
31-06-2019 To Cash 1000000
1-08-2019 By cash 200000
31-08-2019 By bal c/f 800000
2.
A) Reasons to reduce share capital
It is important to be using capital reductions as a method to meet multiple business goals:
Paying dividends: The distribution of dividends is by far the most popular aim. The decrease of
enabling smart for the eradication of impairment loss, that would otherwise help stop the
dividend payments, to generate reserves for distribution. Even so, although a business may still
generate income on the evaluate the profitability for that reason, accumulated losses might just