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Question 1
CLARKE FRINGLAND CO
STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 20X3 (EXTRACT)
$
Share capital (50c) 10,000
Share premium 7,000
Retained earnings 8,000
25,000
Clarke Fringland Co has decided on a bonus issue of shares of 1 for 4 and will use the share premium account for this purpose.
Required
What is the double entry to record the bonus issue of shares and what is the adjusted financial position extract after the bonus issue?Question 2
X Co has the following capital structure.
$
400,000 ordinary shares of 50c 200,000
Share premium account 70,000
Retained earnings 230,000
Shareholders’ equity 500,000
Show its capital structure following:
(a) A ‘1 for 2’ bonus issue
(b) A rights issue of ‘1 for 3’ at 75c following the bonus issue, assuming all rights taken upPlease do not simply type out full questions and expect to be provided with full answers!! You must have answers in the same book in which you found the questions, and so ask about whatever it is in the answers that you are not clear about and then I will explain.
These questions are both very often asked in the exam and are easy questions. Everything needed to be able to answer then is explain in my free lectures on Limited Companies.
The lectures are a complete free course for Paper FA and cover everything needed to be able to pass the exam well.
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