Blaze Ltd has decided to purchase shares with a nominal value of £110,000 (originally issuedfor £120,000) for £140,000. The purchase is to be funded out of distributable profits.The statement of financial position of Blaze Ltd immediately prior to the purchase of theshares is as follows:£Net assets950,000Share capital (£1 shares)Share premium500,000250,000Retained earnings200,000Required(a)(b)Prepare journal entries to give effect to the above transaction.Prepare the statement of financial position of Blaze Ltd immediately after thepurchase.(c)Comment on the capitalisation of capital and revenue reserve of Blaze Ltd afterthe repurchase of its shares.

Treasury stock is acknowledged as the reacquired stock of a corporation which were outstanding in…

Blaze Ltd has decided to purchase shares with a nominal value of £110,000 (originally issued for £120,000) for £140,000. The purchase is to be funded out of distributable profits. The statement of financial position of Blaze Ltd immediately prior to the purchase of the shares is as follows: £ Net assets 950,000 Share capital (£1 shares) 500,000 Share premium Retained earnings 250,000 200,000 Required (a) (b) Prepare journal entries to give effect to the above transaction. Prepare the statement of financial position of Blaze Ltd immediately after the purchase. (c) Comment on the capitalisation of capital and revenue reserve of Blaze Ltd after the repurchase of its shares.

Blaze Ltd has decided to purchase shares with a nominal value of £110,000 (originally issued for £120,000) for £140,000. The purchase is to be funded out of distributable profits. The statement of financial position of Blaze Ltd immediately prior to the purchase of the shares is as follows: £ Net assets 950,000 Share capital (£1 shares) 500,000 Share premium Retained earnings 250,000 200,000 Required (a) (b) Prepare journal entries to give effect to the above transaction. Prepare the statement of financial position of Blaze Ltd immediately after the purchase. (c) Comment on the capitalisation of capital and revenue reserve of Blaze Ltd after the repurchase of its shares.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

100%

Blaze Ltd has decided to purchase shares with a nominal value of £110,000 (originally issued
for £120,000) for £140,000. The purchase is to be funded out of distributable profits.
The statement of financial position of Blaze Ltd immediately prior to the purchase of the
shares is as follows:
£
Net assets
950,000
Share capital (£1 shares)
Share premium
500,000
250,000
Retained earnings
200,000
Required
(a)
(b)
Prepare journal entries to give effect to the above transaction.
Prepare the statement of financial position of Blaze Ltd immediately after the
purchase.
(c)
Comment on the capitalisation of capital and revenue reserve of Blaze Ltd after
the repurchase of its shares.

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