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Sir. it is an additional information.
1) On 1 October 2002, Hollywood issued 60,000 $0.50 ordinary shares at a premium of 100%. A bonus issue of one for ten shares held was made on 1 November 2002; all shares in issue qualified for the bonus.
Capital and Reserves:……………………2003………..2002
Ordinary shares $0.50 each…………….363………….300
share premium………………………………..89……………92
Revaluation reserve…………………………50……………..0
Retained earning…………………………….63……………(70)the answer sheet is below
Cash flows from financing activities:
Proceeds from issue of share capital(60*$1)………………….60Sir, i don’t know how the figure of 60 comes out.
could you possibly explain to me how they get 60?
my working is get stuck till…..below
Dr cash 30
Cr Share capital 30because they don’t notify the range of the share that i must apply to figure the bonus issue…. such as “we issued 3,000 bonus issue” or 4,000….
maybe in my head, most of the knowledge disappear about issuing shares, but just i still remember how the T-entries open.thank you for your efforts that you leave your answers on my questions on weekends.
hopefully, i don’t bother you
thanks:)
“issued 60,000 $0.50 ordinary shares at a premium of 100%.”
The question tells us that 60,000 shares with a nominal value of 50 cents each were issued at a premium of 100%
So, for each 50 cent share that was issued, the entity received 50 cents + 100% of 50 cents
Therefore, for each of the 60,000 shares that were issued, the entity received $1 and 60,000 x $1 = $60,000
Your journal entry of:
Dr cash 30
Cr Share capital 30should be:
Dr Cash $60,000
Cr Share Capital $30,000 (60,000 x 50 cents)
Cr Share Premium $30,000 (60,000 x 50 cents premium)OK?
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