a) Rich is a limited liability company with 200,000 25c shares in issue. At 1 January 2016 the balance on the share premium account is $75,000. The following transactions occur in the year ended 31 December 2016. 31 January: There is a fully accepted 2 for 5 rights issue. The issue price is $1.80. 12 August: There is a 1 for 10 bonus issue made using the share premium account. What are the balances on the share capital and share premium accounts as at 31 December 2016? b) The balance on retained earnings as at 31 December 2016 is $50,000. The directors of the company would like to pay a dividend to shareholders of 10c per share. Is this possible? Explain why.
a) Rich is a limited liability company with 200,000 25c shares in issue. At 1 January 2016 the balance on the share premium account is $75,000. The following transactions occur in the year ended 31 December 2016. 31 January: There is a fully accepted 2 for 5 rights issue. The issue price is $1.80. 12 August: There is a 1 for 10 bonus issue made using the share premium account. What are the balances on the share capital and share premium accounts as at 31 December 2016? b) The balance on retained earnings as at 31 December 2016 is $50,000. The directors of the company would like to pay a dividend to shareholders of 10c per share. Is this possible? Explain why.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
a) Rich is a limited liability company with 200,000 25c shares in issue. At 1 January 2016 the balance on the share premium account is $75,000.
The following transactions occur in the year ended 31 December 2016.
31 January: There is a fully accepted 2 for 5 rights issue. The issue price is $1.80.
12 August: There is a 1 for 10 bonus issue made using the share premium account.
What are the balances on the share capital and share premium accounts as at 31 December 2016?
b) The balance on
The directors of the company would like to pay a dividend to shareholders of 10c per share. Is this possible? Explain why.
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