ACCA F3 Capital Structure
P Co makes a 1 for 5 bonus issue, using the share premium account to the extent that it is possible. Immediately before the bonus issue, P Co had the following equity balance.
| $ | |
| Share Capital ($1 share) | 875,000 |
| Share premium | 30,000 |
| Retained earnings | 300,000 |
What is the balance on the retained earnings after the bonus issue has been recorded ?
Suggested Solution:
| Share Capital | No of shares at $1 | $'000 | |
| Original | $1 Ordinary Shares | 875,000 | 875,000 |
| Bonus 1 for 5 | 175,000 | 175,000 | |
| Total | 1,050,000 | 1,050,000 |
| Ordinary shares | Share premium | Retained earnings | |
| Original | 875,000 | 30,000 | 300,000 |
| Bonus 1 for 5 | 175,000 | (30,000) | (145,000) |
| Balance | 1,050,000 | 0 | 155,000 |
To do the same topic again in ACCA F3 Capital Structure 3
To do another topic in ACCA F3