Mock exam question

This topic has 6 replies, 2 voices, and was last updated 1 year ago by destiny09.

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June 5, 2021 at 9:41 am #623256
destiny09
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Good day,
Can anyone help on how we got to the answer in the question below.

Promulgate’s trial balance as at 31 December, 2015 showed credit amounts of $500,000,000 and $80,000,000 against the $0.50c equity shares and the share premium account respectively. On 1 September, 2015 Promulgate had correctly accounted for a fully subscribed 1 for 4 rights issue at an exercise price of $1.20 each

Promulgate had paid two dividends in the year. The first dividend payment of 4 cents per share was in March and the second dividend payment of 2.5 cents per share was paid in November

What was the total dividend payment made by Promulgate during the year ended 31 December,2015

$28, 500, 000
June 5, 2021 at 12:14 pm #623275
P2-D2
Keymaster
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Hi,

You need to apply the number of shares in issue in March to the 4 cents per share dividend first. So use the share capital figure given alongside the par value.

You then need to calculate the number of shares in issue in November and apply this to the 2.5 cents per share dividend. Here you need to take account of the fact that there will be now more shares in issue given that there has now been a rights issue.

Give it a go and see how you get on. If you’re still struggling then let me know.

Thanks
June 5, 2021 at 3:53 pm #623301
destiny09
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So $500,000,000/.50c = 1000,000,000 shares this does not seems right, I am missing something but I tried couple of times but unable to do it if you can please explain where am I going wrong?

Thank you
June 6, 2021 at 6:49 pm #623519
P2-D2
Keymaster
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That is how you would calculate the number of shares in issue but have you got the initial figures correct from the question?

Thanks
June 7, 2021 at 10:02 am #623612
destiny09
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No I didn’t, would you please explain it how can I do this?
June 7, 2021 at 8:21 pm #623760
P2-D2
Keymaster
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By going back and checking the question. Which question is it?
June 8, 2021 at 3:00 pm #623906
destiny09
- Topics: 3
- Replies: 9
Sorry but I am still not getting this? If Share capital is $500,000,000 x4/5 this right way to calculate share?
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