IGCSE Accounting Paper-2: Specimen Questions with Answers 45 - 46 of 189

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Passage

Turbo & Co. forfeited 100 equity shares of £ 100 each held by Mr. Andy on 20th December 2011, for nonpayment of first call of £ 20 per share and final call of £ 30 per share. These shares were reissued to Mr. Candy on 31st December 2011, at a discount of £ 35 per share.

Question 45 (5 of 5 Based on Passage)

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Short Answer▾

How are Mr. Andy and Mr. Candy affected by the forfeiture and reissue of shares?

Explanation

Mr. Andy losses the ownership towards the shares of the company and ceases to be the member of the company. He also losses all the rights and interests vested with him, due to the forfeiture of the shares owned by him. On the other hand, Mr. Candy becomes the new owner of the shares and gains all the rights and interest in the company. He becomes a member of the company and is liable to pay the amount called on him duly.

Passage

Daffy Ltd had a profit of £ 500000, after charging depreciation of £ 100000 on assets and transferring an amount of £ 150000 to general reserve. The Goodwill amortized was £ 35000, and a profit was gained on the sale of machinery amounting to £ 15000. Other changes in current assets and current liabilities was as follows:

(i) Increase in trade receivables £ 15000

(ii) Increase in trade payables £ 30000

(iii) Increase in prepaid expenses £ 1000

(iv) Decrease in outstanding expenses £ 10000

Question 46 (1 of 5 Based on Passage)

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Short Answer▾

How much cash flow does Daffy Ltd have from Operating activities?

Explanation

The net cash from operating activities of Daffy Ltd is £ 774000

Statement Showing Cash Flows from Operating Activities
PARTICULARSAMOUNTAMOUNT
Net profit before Taxation650000
Adjustments of non cash & non operating expenses:
Add: Depreciation100000
Add: Goodwill35000135000
785000
Less: Profit on sale of machinery-15000
770000
Adjustments for working capital changes:
Less: Increase in trade receivables15000
Less: Increase in prepaid expenses1000
Less: Decrease in outstanding expenses1000026000
744000
Add: Increase in trade Payables30000
Cash flow from operating activities774000

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