Scenario: Bloom Paper Ltd
On 1 January 2025, Bloom Paper Ltd had the following balances:
- Ordinary Share Capital: $200,000
- Retained Earnings: $45,000
- General Reserve: $10,000
During the year ended 31 December 2025, the following occurred:
- Profit for the year: $55,000
- Dividend paid during the year: $12,000
- Transfer to General Reserve: $5,000
Task: Complete the Statement of Changes in Equity
Fill in the missing values below (Mental or physical scratchpad):
| Details | Share Capital | Gen. Reserve | Retained Earnings |
|---|---|---|---|
| Balance 1 Jan | $200,000 | $10,000 | $45,000 |
| Profit for year | -- | -- | [ ? ] |
| Dividend Paid | -- | -- | ([ ? ]) |
| Transfer to Reserve | -- | [ ? ] | ([ ? ]) |
| Balance 31 Dec | $200,000 | [ ? ] | [ ? ] |
Click to reveal the correct solution
Correct Balances at 31 December:
- Retained Earnings: $45,000 + $55,000 (Profit) - $12,000 (Div) - $5,000 (Transfer) = $83,000
- General Reserve: $10,000 + $5,000 = $15,000
- Total Equity: $200,000 + $15,000 + $83,000 = $298,000
Note: The transfer to General Reserve reduces Retained Earnings but increases the General Reserve. Total Equity remains the same!