Rights and bonus issues

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 premium bonus 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 premium so finally... share capital : 125,000 + 62,500 + 37,500 = 225,000 share premium: 100,000 + 187,500 - 37,500 = 250,000 Hope that helps :)

Shanda: Nishan is correct. Have you watched the free lecture on this?

thank you..understood.

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 $300,000 On 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

Nishan is correct again :-)

thank you..

You are welcome :-)