Question - The abbreviated statement of financial position of Red plc, a listed company, at 31 May 2015, was as follows:
£000 Net assets 32,000 Capital and reserves Share capital (25p ordinary) 5,000 Share premium 6,500 Revaluation reserve 3,500 Retained earnings 17,000 32,000
The retained profit for the year to 31 May 2016 was £430,000. During the year to 31 May 2016 the following transactions took place:
i) 29 July 2015 Red plc purchased 6 million of its ordinary shares at £2.50 each to be held as treasury shares ii) 11 November 2015 Sold 2 million of the treasury shares for £2.10 each iii) 8 March 2016 Sold 1.5 million of the treasury shares for £2.70 each
a) Prepare journal entries to record the three transactions above?
b) Prepare the capital and reserves section of the statement of financial position as at 31 May 2016.