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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