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Q. 222
At 30 September 3012 the trial balance of cavern. Includes the following balances.
$000
Equity Share of 20c each. 50,000
Share Premium 15,000Cavern has accounted for a fully subscribed rights issue of equity shares made on 1 April 2012 of one new share for every four in issue at 42 cents each. This was the only share issue made during the year.
What were the balances on the share capital and share premium accounts at September 2011 ?
Share Capital. Share premium
$000. $000
B. 40,000. 4000
Q. 222 B
AbbreviationSC – Share Capital
SP – Share PremiumSC. SP
$000$000Balance 30sept * 2
(250m shares). 50000 15000Share Capital (50m*20c). (10,000). –
Share Premium (50m*22c). – (11,000)
——— ——-Balance 30 September X1
(200 shares). 40,000. 4,000Sir how did they arrive at 50m shares to deduct from 250m shares ?
“Sir how did they arrive at 50m shares to deduct from 250m shares ?”
The equity shares have a nominal value of 20 cents per share and an aggregate $ value at the end of the year of $50,000
Therefore there must be 250,000 shares in issue at the end of the year, after the rights issue of 1 for 4
If there are 250,000 shares in issue AFTER the 1 for 4 rights issue, then there must have been only 200,000 shares in issue BEFORE the 1 for 4 rights issue
If you had held 200 shares before the 1 for 4 rights issue, how many NEW shares would you have taken up on the basis of 1 for every 4 already held?
Answer 50 new shares and now you have 250 shares
If you had held 200,000 shares before the 1 for 4 rights issue, how many NEW shares would you have taken up on the basis of 1 for every 4 already held?
Answer 50,000 new shares and now you have 250,000 shares
And if each share has a nominal value of 20 cents that’s $50,000 worth of share capital that you hold
OK?
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