NGEE ANN POLYTECHNIC - DIPLOMA IN ACCOUNTANCY

INTERMEDIATE FINANCIAL ACCOUNTING

TUTORIAL QUESTIONS

Question 1: (Adapted from Aug 2011 Exam)

“It is definitely more advantageous to be a preference shareholder than an ordinary

shareholder. Preference shareholders receive fixed dividends annually. In addition,
preference shareholders will always receive more dividends annually than ordinary
shareholders.” Do you agree with the above opinion? Explain in detail your opinion.

Question 2:
Journalize the following share issue transactions of Kings Ltd:

a) On 19 March 20X7, Kings Ltd issued 50,000 ordinary shares at the issue price
of $1.30 per share.
b) On 4 April 20X7, Kings Ltd received inventory valued at $25,000 and equipment
with market value of $16,000 in exchange for 40,000 ordinary shares.
c) On 8 April 20X7, Kings Ltd traded 35,000 ordinary shares for a second-hand
motor vehicle with a listed selling price of $45,000. The market value of the
shares on this day was $1.20 each.
d) On 20 April 20X7, Kings Ltd issued 12,000 non-redeemable preference shares
at $5 per share.

Question 3
Queens Ltd was incorporated on 1 April 2010.
(i) Journalize the following share issue transactions (a) to (d) of Queens Ltd.
(ii) Prepare a Statement of Financial Position at the end of the financial year ended
31 March 2011. Assume no depreciation of the fixed assets in the first year of
purchase.

a) On 1 April 2010, Queens Ltd bought computer and paid for it by issuing 20,000
ordinary shares. An industry expert values the computer at $55,000.
b) On 15 May 2010, Queens Ltd exchanged 10,000 ordinary shares for a motor
vehicle having a list price of $36,000. Market price per share was $2.50.
c) On 18 June 2010, the company issued 200,000 ordinary shares in exchange
for a building appraised at $420,000 and machine with a fair value of $80,000.
d) On 30 September 2010, the company issued 50,000 redeemable preference
shares at $2 each. These shares are due for redemption on 1 October 2020.
e) On 30 March 2011, the company issued 40,000 non-redeemable preference
shares for $60,000. By the same day, the exact application money had been
received and shares allotted to the applicants.

The End

Company Accounting 1 – updated April 2019 semester Page 1 of 1