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At 31 December 2004 a company’s capital structure was as follows:
ordinary share capital $125,000 [500,000 shares of 25c each]
share premium account $100,000In the year 31 December 2005 the company made a rights issue of 1 share for every 2 held at $1 per share and this was taken up in full. Later in the year the company made a bonus issue of 1 share for every 5 held, using the share premium account for the purpose.
What was the company’s capital structure at 31 December 2005?Can I see separate calculations for ordinary share capital and share premium account please?
Hi, um a student here.. but I think I can help you with this…
rights issue..
1 for every 2 held.. it will be therefore.. 500,000/2 = 250,000 shares as rights issue..
hence…
250,000 x 0.25 = 62,500 to be added to share capital
250,000 x 0.75 = 187,500 to be added to share premiumbonus issue..
1 for every 5 held.. so.. 750,000/5 = 150,000 shares as bonus issue
hence..
150,000 x 0.25 = 37500 to be added to share capital
and the same amount to be deducted from share premiumso finally…
share capital : 125,000 + 62,500 + 37,500 = 225,000
share premium: 100,000 + 187,500 – 37,500 = 250,000Hope that helps 🙂
On first January 2013 the capital structure of Q a limited liability company was as follows:
Share capital [1,000,000 ordinary shares of 50c each] $500,000
Share premium $300,000On April 2013 the company made an issue of 200,000 50c shares at $1.30 each and on 1 July made a bonus issue of 1 share for every 4 in issue at that time using the share premium account for this purpose.
What are the balances on the accounts after the bonus issue?
Is this question calculated in the same way as the one above?
yes, it is the same approach.
for the fresh issue of 200,000 shares on April..
200,000 x 0.5 = 100,000.. add to share capital
200,000 x 0.8 = 160,000.. add to share premium.bonus issue on July,,
1 for every 4 in issue.. so that will be [1,000,000 + 200,000 = 1,200,000]/4 = 300,000 shares as bonus issue.. so
300,000 x 0.5 = 150,000.. added to share capital, and same amount deducted from share premium.500,000 + 100,000 + 150,000 = 750,000 share capital
300,000 + 160,000 – 150,000 = 310,000 share premium
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