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Hi , would you be able to assist me with the following question please
At the 1 July 2000 the share capital and share premium account
Share capital (300,000 ordinary shares of 25c) $75000
Share premium $200000
During the year end the following occured:
1) on 1 Jan 2001 the company made a rights issue of 1 share for every 5 held, at $1.20 per share
2) on 1 April 2001 the company made a bonus issue of 1 share for every 3 in issue at that timeWhat is the share capital and share premium ?
I hope to hear from you soon , thank you in advance 🙂
The rights isa is 1/5 x 300,000 = 60,000 shares.
So the share capital will increase by 60000 x 0.25 = $15,000 and the share premium will increased by 60,000 x (1.20 – 0.25) = $57,000The bonus issue is 1/3 x (300,000 + 60,000) = 120,000 shares.
So share capital will increase by 120,000 x 0.25 = $30,000, and share premium will decrease by $30,000.Thank you very much @john moffat 🙂
Dear John,
I want to ask if this entry is correct according to its narrative
Investements: Q ordinary shares dr 100000 $
Share capital cr 100000 $
80k shares of50c issued at 1.25 in excha ge for shares in Q
Answer is no
Why?When you issue shares, only the nominal value is credited to share capital (in this case 80,000 x $0.50 = $40,000) and the extra is credited to share premium (in this case 80,000 x (1.25 – 0.50) = $60,000)
HI 🙂
A company has balance on share premium account of 50000$ and on retained earnings of 75000$. Issued share capital is 400000 25c shares.The company decides to make a bonus issue of one for one. What are the closing balances on share premium and retained earnings?
Share premium 0 Retained earning 25000
The issue 400,000 shares of 0.25
So share capital goes up by 400,000 x 0.25 = $100,000
Share premium goes down by $50,000 (it cannot go below zero)
Retained earnings goes down by the remainder (100,000 – 50,000)share capital 1,000,000 shares of 50c each = 500000 dollars
share premium account = 400000 dollarsIn the year-end , the company made following issues :
1 January 2005 :
A bonus issue of one share for every four in issue at that date ,using the share premium account.
1 April 2005 :
A rights issue of one share every ten issue at that date ,at 1.50 dollar per share
what is the share capital and share premium ?There is no point is simply setting test questions and expecting an answer!
You must have an answer in the same book in which you found the question, and so you should ask about which part of the answer you did not understand – then I will try and help you.
(Assuming obviously that you have watched the free lectures on this topic.)
There is no point at all in attempting questions for which you do not have the answer.
You should use a Revision Kit from one of the ACCA approved publishers – they have answers and explanations.
This forum is to get help, not to receive answers to questions that you do not have the answers for.
Share capital is $687,500; Share premium is $400,000
Hi , would you be able to assist me with the following question please
A company’s share capital consists of 150000 ordinary shares of $0.50 each.
It makes a right issue of 1 ordinary share for every 3 already held at $1.20 per share.
It then makes a bonus issue of 1 share for every 5 held.
Which amount will be shown in the balance sheet for share capital.Any help will be appreciated
Thanks…..You must have an answer in the same book in which you found the question. Ask about whatever it is in the answer that you are not clear about and then I will explain.
I assume that you have watched my free lectures on limited companies, where the approach is explained in detail?
The lectures are a complete free course for Paper FA and cover everything needed to be able to pass the exam well.
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