Question

a company with an existing issued share capital of 200000 ordinary shares of $0.50 each, made a one for four bonus issue. This was later followed by a one for two rights issue at $1.20 per share.
What will be the balance on the share capital account after these transactions?

Answer 1

200000@0.50=100000
they issused bonus 1 for four
i.e 50000@0.50=25000
now they have issued a total of 250000 shares
Later they issue one for two @1.20(this is not a bonus issue) 250000/2=125000 shares
the face value of the share is O.50 and the par value is 1.20 we have to take the face value here bc the rest of the extra income which the company wud generate by selling the shares at 1.20 i.e 1.20-50=0.70 the company wud get extra 0.70 on each shares that wud be transferred to the RESERVES ACCNT and we dnt have to consider that while calculating the Share Capital
200000@0.50=100000
50000@0.50 = 25000
125000@050= 62500
total share capital balance=187500