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Equity shares of 20c each 50,000
Share premium 15,000Cavern Co has accounted for a fully subscribed rights issue of equity shares made on 1 April 20X2 of one new share for every four in issue at 42 cents each. This was the only share issue made during the year.
Using the drag and drop options below, show the balances on the share capital and share premium accounts at 30 September 20X1.SOLUTION
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Share capital Share premium
Balance 30 September X2 50,000 15,000
(250m shares)
Rights issue:
Share capital (50m x 20c) (10,000)
Share premium (50m x 22c) (11,000)Balance 30 September X1 40,000 4,000
(200m shares)Good day,Pls i don’t understand how the answer was gotten. I’ll appreciate if you can explain
Hi,
Which bits specifically do you not understand? I’m not here to just answer an entire question, you need to show me what you do understand first and then I can offer better guidance.
As a starter, you will need to know the number of equity shares in issue, which you can calculate from the $50,000 in the SFP, where the par value is 20c each. You can then calculate the number of shares issued and then look at the accounting entries.
Look forward to hearing back from you.
Thanks.
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