The Capital and reserves of a company appear as shown below. On this day the directors of the company resolve to make a bonus issue of one for every five ordinary shares, using to maximum profits not available for distribution. Which of the following entries is correct: Ordinary shares of 50 cents R800 000 Share premium account R120 000 Retained earnings R195 500 Dr Share Premium R120 000, Cr Share Capital R120 000 Dr Share premium R160 000, Cr Share Capital R160 000 Dr Share Premium R120 000, Dr Retained Earnings R40 000, Cr Share Capital R160 000 Dr Retained Earnings R160 000, Cr Share Capital R160 000
The Capital and reserves of a company appear as shown below. On this day the directors of the company resolve to make a bonus issue of one for every five ordinary shares, using to maximum profits not available for distribution. Which of the following entries is correct: Ordinary shares of 50 cents R800 000 Share premium account R120 000 Retained earnings R195 500 Dr Share Premium R120 000, Cr Share Capital R120 000 Dr Share premium R160 000, Cr Share Capital R160 000 Dr Share Premium R120 000, Dr Retained Earnings R40 000, Cr Share Capital R160 000 Dr Retained Earnings R160 000, Cr Share Capital R160 000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The Capital and reserves of a company appear as shown below. On this day the directors of the company resolve to make a bonus issue of one for every five ordinary shares, using to maximum profits not available for distribution. Which of the following entries is correct:
Ordinary shares of 50 cents R800 000
Share premium account R120 000
Dr Share Premium R120 000, Cr Share Capital R120 000
Dr Share premium R160 000, Cr Share Capital R160 000
Dr Share Premium R120 000, Dr Retained Earnings R40 000, Cr Share Capital R160 000
Dr Retained Earnings R160 000, Cr Share Capital R160 000
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