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at 1 july 20X4,a limited liability company’s capital structure was as follows:
share capital 1m shares of 50c each $500000
share premium a/c $400000
in the year ended 30 june 20X5 the company made the following share issues:1 jan 20X5:
A bonus issue of 1 share for every 4 in issue at that date,using the share premium account.
1 apr 20X5:
A rights issue of 1 share for every 4 in issue at that date,@ $1.50per share.
What will be the balances on the company’s share capital and share premium accounts at 30 june 20X5 as a result of these issues?ans:share capital $687,500
share premium account $400000I’m not quite sure how to get the answers. please help!
Have you watched the free lecture on this?
First the is a bonus issue of 250,000 shares, so share capital increases by $125,000 and share premium reduces by the same amount.
So now there are 1.25m shares.
Then there is a rights issue of 1.25m/4 shares. Share capital increases by 0.50 per share, and share premium increases by 1.00 per share.
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