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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 3000During 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)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.
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