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Good day,
Can anyone help on how we got to the answer in the question below.Promulgate’s trial balance as at 31 December, 2015 showed credit amounts of $500,000,000 and $80,000,000 against the $0.50c equity shares and the share premium account respectively. On 1 September, 2015 Promulgate had correctly accounted for a fully subscribed 1 for 4 rights issue at an exercise price of $1.20 each
Promulgate had paid two dividends in the year. The first dividend payment of 4 cents per share was in March and the second dividend payment of 2.5 cents per share was paid in November
What was the total dividend payment made by Promulgate during the year ended 31 December,2015
$28, 500, 000
Hi,
You need to apply the number of shares in issue in March to the 4 cents per share dividend first. So use the share capital figure given alongside the par value.
You then need to calculate the number of shares in issue in November and apply this to the 2.5 cents per share dividend. Here you need to take account of the fact that there will be now more shares in issue given that there has now been a rights issue.
Give it a go and see how you get on. If you’re still struggling then let me know.
Thanks
So $500,000,000/.50c = 1000,000,000 shares this does not seems right, I am missing something but I tried couple of times but unable to do it if you can please explain where am I going wrong?
Thank you
That is how you would calculate the number of shares in issue but have you got the initial figures correct from the question?
Thanks
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