A Accounting

Share capital and share premium ( video below)

At 1 January 20X2 the capital structure of ABC, a limited liability company, was as follows:

$
Issued share capital 250,000 ordinary shares of 25c each 62,500
Share premium account 75,000

On 1 April 20X2 the company made an issue of 50,000 25c shares at $1.20 each, and on 1 July the company made a bonus (capitalisation) issue of one share for every five in issue at the time, using the share premium account for the purpose.

Calculate the company’s share capital and share premium account at 31 December 20X2.

Answer

$
Share capital @ 1.1.20X2  62,500
Issue on 1.4.20X2 (50,000 @ 25c) 12,500
Bonus issue (300,000/5 x 1) @ 25c 15,000
Share capital as at 31.12.20X2 90,000
Share premium @ 1.1.20X2  75,000
1.4.20X2 50,000 shares @ (120c – 25c) 47,500
Bonus issue (as above) (15,000)
107,500

Public issue

Dr. Cash………………………………60,000

Cr. Share capital……………………………………. 12,500

Cr. Share premium…………………………………47,500

Bonus Issue

Dr. share premium………………15,000

Cr. Share Capital…………………………………..…15,000


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