# Company accounts…..plz show ur workings

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• #52193

queeenshana
Participant

At 30th June 2005 the capital reserves of Smith, a limited liability company were:
\$m
Share capital
Ordinary shares of \$1 each 100

During the year ended 30th June 2006, the following transaction took place:
1 September 2005 A bonus issue of one ordinary share for every
two held, using the share premium

1 January 2006 A fully subscribed rights issue of two ordinary
shares for every five held at that date; at
\$1.50 per share
What would the balances on each account be at 30 June 2006?

a.) \$210 \$110
b.) \$210 \$60
c.) \$240 \$30
d.) \$240 \$80

#96254

Najiya
Participant

{All figures in millions }
No.of shares as on 30th June 2005 is \$100/\$1 = 100 shares.

On 1 Sept 2005
Bonus Issue
(100/2)*1 = 50 shares.
50 shares * \$1 = \$50
Entry is:
Cr. Share Capital \$ 50

On 1 Jan 2006
No. of shares on this date is 100 + 50 = 150 shares.

Rights Issue
(150/5)*2 = 60 shares.
60 shares * \$ 1.50 = \$90
Only \$1 per share goes to the share capital. Balance of \$0.50 per share goes to the share premium.
\$1 * 60 = \$60
\$0.50 * 60 =\$30
total \$90
Entry is:
Dr. Cash/Bank \$90
Cr. Share Capital \$60

Share Capital as on 30th June 2006
\$100(opening balance) + \$50(bonus issue) + \$60(rights issue) = \$210
Share Premium as on 30th June 2006
\$80(opening balance) – \$50(bonus issue) + \$30(rights issue) = \$60

Hope that helps

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