[teamilkyway]

Hey I’d like to ask a question,

At 1 July 20X4 a limited liability company’s capital structure was as follows:
$
Share capital 1,000,000 shares of 50c each 500,000
Share premium account 400,000
In the year ended 30 June 20X5 the company made the following share issues:
1 January 20X5:
A bonus issue of one share for every four in issue at that date, using the share premium account.
1 April 20X5
A rights issue of one share for every ten in issue at that date, at $1.50 per share.
What will be the balances on the company’s share capital and share premium accounts at 30 June
20X5 as a result of these issues?

And i understand all the calculation but what confuses me is why the right issue is 125.000? I thought it would be 100.000 because 1000.000 x 1/10 due to (one share for every ten) Please help me, and thank you in advance

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