Week 6 - Suggested solutions to homework questions Week 6...

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Unformatted text preview: Suggested solutions to homework questions Week 6 Problem 11.11 Problem 11.15 Weldon Ltd Income Statement for year ended 30 June 2009 $ Operating profit before tax 22 000 Less: Income tax expense 9 000 Profit after tax 13 000 Note of retained profits year ended 30 June 2009 $ $ Balance 1 July 2008 25 000 Profit after tax 13 000 38 000 Less: Interim dividend paid 5 600 Proposed final dividend 2 800 18 400 Transfer to general reserve 10 000 Balance 30 June 2009 19 600 Weldon Ltd Shareholders' equity section of balance sheet as at 30 June 2009 $ Share capital 125 000 General reserve 28 000 Asset revaluation reserve 20 000 Retained profits 19 600 Case 11D 1. Some possible reasons: if the share price is low it is one way of increasing demand increases EPS as number of shares decreases (assuming profit does not drop proportionally). Move considered important part of capital management. 2. More likely if share price is depressed. 3. Cash decreases; a shareholder equity account decreases e.g. retained profits. Profit is not affected but EPS will increase as the denominator falls, i.e. the number of shares. ...
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This note was uploaded on 03/19/2012 for the course ACT 1511 taught by Professor Leon during the Three '12 term at University of New South Wales.

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