Advanced financial accounting - Lecture 23: Limited companies. The main topics covered in this chapter include: right issue; journal entry and record journal entry; owner’s equity; bonus issue; initial public offer;... Please refer to the lecture for details!
Advanced Financial Accounting FIN-611 Mian Ahmad Farhan Lecture-23 Limited Companies Right Issue Journal Entry Bank A/c xxx Share capital A/c xxx Working Amount received = 200,000 x 1.5 = 300,000 Face value = 2,00,000 x = 200,000 Share premium = 200,000 x 0.5 = 100,000 Journal Entry Bank A/c 300,000 Share capital A/c 200,000 Share premium A/c 100,000 Question DT limited has 800,000 Rs ordinary shares in issue They were originally issued at a premium of 40 paisa each The current market price of these shares is Rs 3.50 DT has announced for rights issue at Rs per share Required Record journal entry Prepare balance sheet Working Right issue = 800,000 / x = 200,000 shares Amount received = 200,000 x = 600,000 Face value = 2,00,000 x = 200,000 Share premium = 200,000 x = 400,000 Journal Entry Bank A/c 600,000 Share capital A/c 200,000 Share premium A/c 400,000 Owner’s Equity Owner’s Equity Amount Share capital (800,000 + 200,000) Share premium (320,000 + 400,000) 1,000,000 720,000 Bonus Issue Journal Entry Reserve A/c xxx Share capital A/c xxx Question The owner’s equity section of “Bonus Limited” is as follow: Owner’s Equity Issued capital 50,000 @ 10 Share premium Retained profit Amount 500,000 380,000 570,000 1,450,000 Question Bonus share is issued, for every shares held (50,000 / x 2) = 20,000 x 10 = Rs 200,000 Share premium account will be utilized for bonus shares Required Show the effect on owner’s equity account before and after adjustment of bonus share Solution Particulars Before bonus issue Bonus issue After bonus issue Share capital 500,000 200,000 700,000 Share premium 380,000 (200,000) 180,000 Retained profit 570,000 570,000 Total 1,450,000 1,450,000 Journal Entry Share premium A/c 200,000 Share capital A/c 200,000 Dividend Initial Public offer ... Journal Entry Bank A/c 300,000 Share capital A/c 200,000 Share premium A/c 100,000 Question DT limited has 800,000 Rs ordinary shares in issue They were originally issued at a premium of 40 paisa... Journal Entry Reserve A/c xxx Share capital A/c xxx Question The owner’s equity section of “Bonus Limited? ?? is as follow: Owner’s Equity Issued capital 50,000 @ 10 Share premium Retained profit Amount