Net assets 900,000 Ordinary share capital 400,000 (400,000 shares of £1 each fully paid) Share Premium 100,000 Revaluation reserve 200,000 Revenue reserves 200,000 900,000 900,000
The directors of the company have decided to make a bonus issue on a one-for-two basis, followed immediately by a rights issue on a one-for-four basis, at a premium of 60p. You are required to prepare a balance sheet after the above share issues have taken place and to explain the changes that have occurred in the reserves of the company. Assume the company wishes to retain the maximum dividend payment potential.
I get the one for two and one for four, but not sure where to apply this to?