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The question requires us to produce a statement of changes in equity.
i will only reproduce the part i do not understand:
Share capital: during the year, following changes occurred in the capital structure:
1. an issue of 200,000 $1 ord bonus shares capitalizing in its share premium reserve
2. an issue of 400,000 $1 ord shares (issued price $1.4)
this means:
a. the share premium is decreased by 40 (160 – 200) – this figure is correct
b. as for share capital, there is an addition of 400. but the answer shows an addition of 600.
can u please explain how this is so?
thanks in advance
Your note 1 says “an issue of 200,000 $1 ord bonus shares ….”
and note 2 says “an issue of 400,000 $1 ord shares …..”
Now, if I add 200,000 to 400,000 I arrive at 600,000
Does that do it for you? Think about the double entry for note 1
Debit share premium account $200,000 and credit ?????????
You’re welcome! I always find that with tricky calculations like that, it’s safer to do it on my fingers
🙂
ah.. Mike Little .. we meet again … by the way.. i managed to get a 72 on F4
i certainly want to be able to do trick questions on my fingertips .. hopefully typing on F7 forum will help me achieve that….
Ah Mansoor! Welcome back! And very well done with your F4 – I always knew that you had it in you!
Never mind these new-fangled bits of modern technology! They’re just a passing phase. When faced with tricky calculations like “What’s 400 + 200?” then I always recommend the use of one’s fingers – if only as a check on the continuing accuracy of these modern calculator things.
🙂
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