ELEMENTARY EXAMPLES OF STATEMENTS OF CHANGES IN EQUITY

QUESTION 1

Question

On 31 December 20-2 X Limiteds statement of financial position included the

following:
$
Ordinary share capital ($1 shares) 60 000
General reserve 13 000
Retained earnings 9 000

During the year ended 31 December 20-3 X Ltd

Issued 40 000 additional ordinary shares of $1 each
Paid a final dividend of $4000 from the previous year
Paid an interim dividend of $0.10 per share on shares held at the beginning of the year
Made a profit for the year of $28 000.

At 31 December 20-3 the directors

Transferred $10 000 to general reserve
Proposed a final dividend of $0.20 per share

Prepare the statement of changes in equity for the year ended 31 December 20-3.

Suggested answer

X Limited
Statement of changes in equity for the year ended 31 December 20-3
Share General Retained Total
Capital Reserve Earnings
$ $ $ $
Balance at 1 January 20-3 60 000 13 000 9 000 82 000
Share issue 40 000 40 000
Profit for the year 28 000 28 000
Dividend paid (final) (4 000) (4 000)
Dividend paid (interim) (6 000) (6 000)
Transfer to general reserve 10 000 (10 000) -

Balance at 31 December 20-3 100 000 23 000 17 000 140 000

QUESTION 2

(Based on IGCSE June 2013 Paper 12 Question 6(d))

The equity section of Jarvis Limiteds statements of financial position showed the
following:
At 31 March 2012 2013
$ $
Ordinary shares of $.50 each 100 000 100 000
Retained earnings 29 000 31 000
General reserve - 10 000

The profit for the year ended 31 March 2013 was $26 000.

On 1 June 2013 the directors paid a dividend of $0.03 per share which related to the
previous year. On 15 January 2013 they paid an interim dividend of 8%.

Prepare the statement of changes in equity for the year ended 31 March 2013.

Suggested answer

Jarvis Limited
Statement of changes in equity for the year ended 31 March 2013
Share General Retained Total
Capital Reserve Earnings
$ $ $ $
Balance at 1 April 2012 100 000 - 29 000 129 000
Profit for the year 26 000 26 000
Dividend paid (final) (6 000) (6 000)
Dividend paid (interim) (8 000) (8 000)
Transfer to general reserve 10 000 (10 000) -

Balance at 31 March 2013 100 000 10 000 31 000 141 000