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ACCA Applied Knowledge · Financial Accounting · Statement of financial position

At 31 March 20X6 Zenith Co had the following balances: share capital $500,000 (shares of $1 each), share premium $120,000, revaluation surplus $60,000, retained earnings brought forward $210,000. Profit for the year was $95,000 and dividends paid during the year were $40,000. What is total equity at 31 March 20X6?

Total equity is $945,000. Retained earnings carried forward are $210,000 plus $95,000 profit less $40,000 dividends, giving $265,000. Adding share capital of $500,000, share premium of $120,000 and the revaluation surplus of $60,000 gives the total.

  1. A$945,000Correct
  2. B$885,000
  3. C$1,005,000
  4. D$850,000

Explanation

Closing retained earnings = 210,000 + 95,000 - 40,000 = 265,000. Total equity = 500,000 + 120,000 + 60,000 + 265,000 = 945,000. $885,000 omits the revaluation surplus; $1,005,000 ignores the dividend deduction... wait, it adds the dividend instead of deducting it and so is wrong.

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