Zigma SAOG has issued 4 million, OMR 1 equity share. During the year 2016, the company decided to make a bonus issue in the ratio of 2 for 4 shares held. The following balances reserves and surplus accounts that the company had prior to the Issue of bonus shares: Share premium OMR 1,550,000 General Reserve OMR 90,000 Retained earnings OMR 600,000 Revaluation surplus OMR 30,000 For the issue of bonus shares it is agreed to use the share premium in priority and general reserve can be used to an extent of OMR 60,000 only. Based on the above data, write the respective journal entry and show its working and the effect on items of SOFP.
Zigma SAOG has issued 4 million, OMR 1 equity share. During the year 2016, the company decided to make a bonus issue in the ratio of 2 for 4 shares held. The following balances reserves and surplus accounts that the company had prior to the Issue of bonus shares: Share premium OMR 1,550,000 General Reserve OMR 90,000 Retained earnings OMR 600,000 Revaluation surplus OMR 30,000 For the issue of bonus shares it is agreed to use the share premium in priority and general reserve can be used to an extent of OMR 60,000 only. Based on the above data, write the respective journal entry and show its working and the effect on items of SOFP.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Zigma SAOG has issued 4 million, OMR 1 equity share. During the year 2016, the company decided to make a bonus issue in the ratio of 2 for 4 shares held. The following balances reserves and surplus accounts that the company had prior to the Issue of bonus shares:
Share premium OMR 1,550,000 General Reserve OMR 90,000
Retained earnings OMR 600,000 Revaluation surplus OMR 30,000
For the issue of bonus shares it is agreed to use the share premium in priority and general reserve can be used to an extent of OMR 60,000 only. Based on the above data, write the respective journal entry and show its working and the effect on items of SOFP.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps with 3 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education