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Dear Sir,
I am trying to solve a question but seems i failed to get the correct answer, here is the question;
The equity of Blue before the following share issues was as follows:
$
Share capital $1 shares 1,500,000
Share Premium 30,000
Retained Profits 579,000
Total 2,109,000During the year Blue issued 500,000 $1 ordinary shares at a value of $3.30 and made a bonus issue of 1 for every 5 ordinary shares held at the end of the year.
Requirement – Show the equity of Blue after the share issues given above.
Thanks
Have you watched our free lectures on this? (Our free lectures are a complete course for Paper F3 and cover everything needed to be able to pass the exams well)
The new issue raises 500,000 to share capital, and 1,150,000 to share premium
Since there are now 2,000,000 shares in issue, the bonus issue is of 400,000 shares – so share capital increases by 400,000 and share premium reduces by 400,000.
So at the end of the year, share capital = 2,400,000; share premium = 780,000; and retained earnings = 579,000.
Total = 3,759,000
Again, I really do suggest that you watch our free lectures.
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