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At 31 December 20X1 the capital structure of a company was as follows:
Ordinary share capital
100,000 shares of 50c each 50,000
Share premium account 180,000During 20X2 the company made a bonus issue of 1 share for every 2 held, using the share premium account for the purpose, and later issued for cash another 60,000 shares at 80c per share.
What is the company’s capital structure at 31 December 20X2?
1 1 for 2 Bonus issue. 50,000, $0.50 shares issued, so SC up by 25,000, to 75,000. SP down by 25,000. New structure
SC 150000 50c shares = 75,000
SP = 55,000Total cap = 130,000 as before.
2 60,000 new shares issued at 80c, SC up by nominal/par amount, 60,000 x 0.5 = 30,000. Share premium up by 60,000 x 0.3 = 18,000.
New structure
SC 210,000 50c shares = 105,000
SP (55 + 18) = 73,000Total cap = 178,000, up by 48,000 which is amount eaused od 60,000 x 0.8.
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