2015 June Exam ques 3

Well, if 30,000 is AFTER a 1 for 5 rits issue, then 25,000 must have been the figure BEFORE the rights issue Then a 1 for 5 would involve the issue of 25,000 / 5 = 5,000 new shares Can you take it from there?

yeah.. thanks !

You're welcome - keep posting if you get stuck!

So, in the same question there is part relating to suspense account.. I didn't understand how to account for it as I referred the solution as well but is not making sense to me. Please help...

I really wish that you had asked this at the same time! Without me going back to the question, I seem to remember that the suspense account represented he "other" entry for te proceeds from the rights issue 5,000 shares were issued for (SAY!) $2.60 each giving a credit in suspense account of $13,000 Of that $13,000, $5,000 should be in Share Capital account and the remaining $8,000 in Share Premium account So we now need to debit suspense account with $13,000 and credit $5,000 to share capital account and $8,000 to share premium account If my recollection of the problem is incorrect, post again and I'll look the question up again on my ipad