Wk%203%20Lecture%20illustration%20solution.docx

35 000 creditors 105 000 bank loan 100 000 cash at

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35 000 Creditors 105 000 Bank Loan 100 000 Cash at Bank 120 000 Shares in Coles Myer (at cost) 80 000 Gain on Disposal of Coles Myer Shares 10 000 Share Capital 200 000 (Purchase consideration to Kong Pty Ltd)
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5 Immediately after recording the above journal entries related to the acquisition, the statement of financial position for Hong Ltd would appear as follows: Hong Ltd Statement of financial position (immediately subsequent to acquisition) ------------------------------------------------------------------------------------------------------- - Assets $ | Liabilities $ $ Cash at Bank 40 000 | Creditors 325 000 Debtors 115 000 | Provisions 80 000 Inventory 170 000 | Bank Loans 420 000 825 000 Motor Vehicles 50 000 | Plant & Equipment (net) 700 000 | | Shareholders' Equity Land & Buildings (net) 950 000 | Share Capital 1 100 00 0 Goodwill 35 000 | | Retained Earnings 135 000 1 235 000 2 060 000 | 2 060 000 The share capital balance of $1 100 000 comprises the opening balance ($900 000) plus the value of the new shares issued ($200 000). The retained earnings figure, amounting to $135 000, comprises the opening balance of $125 000 plus the gain on disposal of the Coles Myer shares of $10 000.
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