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I have this question taking me down .
ABC PLC has the following balances as at 1st January 2007
$
Share Capital 300000
Share Premium 15000
Retained Earning 402435
During the year the following took in account
1) Rights issue was taken up for 1 for 3 at $2 per share
2) Bonus Issue was taken into account after the right’s Issue for 2 for 1.
Required: The balance sheet extract showing the following : Share Capital , Share Premium, And retained EarningsI got my balances for Share Capital as $1200000(Cr.) and Share Premium as $85000( Dr.) i am confused at retained earnings. Ill greatly appreciate if u can help me through.
Please do write the question properly!!! Is opening balance of share premium 15,000 in ur book or 150,000??? Ur share capital and share premium both wrong!!! Let me know the proper question ASAP! if u cannot type take a picture of the question and send it to wimpyspeedyspike@yahoo.com
Hi
It is not possible (in fact it’s illegal!) to have a share premium account in debit! The financing for the bonus issue must therefore be a mixture of share premium (maximum use of 715,000) with the balance of 85,000 coming from the retained earnings. That leaves share capital at 1,200,000, share premium at zero and retained earnings at 317,435
OK?
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