Can you please help with this: At july1 2004 a limited liability company's capital structure was as follows:Share capita 1000 000 shares of 50c each $500 000 Share Premium account $400 000.In the year ended 30 june 2005 the company made the following share issues: 1January 2005 A bonus 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 2005?
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11y ago#1I am sorry, but you must have mistyped the question.
It is impossible to have a bonus issue at $1.50 per share - bonus issues are always shares issued free of charge!
Yes your right it was suppose to be at 1 january 2005 A bonus issue of one share for every four in issue at that date,Using the share premiumu account.At 1 april a rights issue of one for every ten in issue at that date at 1.50 per share
11y ago#3They started with 1M shares, so the bonus issue is of 250,000 shares.
So share capital increases by 250,000 x 0.50 = $150,000, and share premium reduces by the same amount.
They now have 1.25M shares.
So the rights issue is of 125,000 shares. Share capital increases by 125,000 x 0.50; and share premium increases by 125,000 x (1.50 - 0.50)
Thank you i now get it i didnt uderstand the rights issue calculation.but now i do Thank you
11y ago#5You are welcome :-)
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