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willow CO limited company

Zzainab1y ago
An extract of Willow Co’s trial balance as at 30 June 20X1 is shown below. Debit Credit $000 $000 Equity shares, $1 72000 Share premium 13000 Revaluation surplus at 1 July 20X0 10000 Retained earnings at 1 July 20X0 12920 Dividends paid 3000 During the year ended 30 June 20X1, Willow Co made a ‘1 for 5’ bonus issue. Complete the following table to identify the accounting entries required to record the bonus issue. what will the double entries be for this issue can u plz explain why does the mark scheme say (72000 x 1/6) when it should be (72000 x 1/5)
John MoffatJohn MoffatTutor1y ago#1
It is because there are 72,000 shares at the end of the year. The rights issue was during the year and so the 72,000 shares included the rights issue. For every 5 shares that there were before the issue, they issued 1 more and so there were 6 shares in total after the rights issue (of which 1 was the rights). So 1/6 of the 72,000 were because of the rights.
Zzainab1y ago#2
ohhh ok got it thnku sooo much
John MoffatJohn MoffatTutor1y ago#3
You are welcome :-)
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