A Accounting

Bonus issue ( video below)

At 31 December 20X3 the capital structure of a company was as follows:

$
Ordinary share capital
25,000 shares of 50c each 12,500
Share premium account 45,000

During 20X3 the company made a bonus issue of 1 share for every 2 held, using the share premium account for the purpose, and later issued for cash another 15,000 shares at 80c per share.

What is the company’s capital structure at 31 December 20X3?

Answer

$ $
Ordinary shares at start of year  12,500
Add: bonus issue (25,000 x ½ )12,500 x 50c 6,250
Add: new issue 15,000 x 50c 7,500
26,250
Share premium at start of year 45,000
Less: bonus issue 12,500 x 50c (6,250)
Add: new issue 15,000 x 30c 4,500
43,250

Journal Entry

Bonus Issue

Dr. share premium………………6,250

Cr. Share Capital………………………………..…6,250

Public issue

Dr. Cash………………………………12,000

Cr. Share capital…………………………………….7,500

Cr. Share premium…………………………………4,500


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