Depending upon the constitutional documents of the company only certain classes of shares may be entitled to bonus issues or may be entitled to bonus issues in preference to other classes. Accounting for bonus issue 4 2 an issue of bonus shares is referred to as a bonus issue. A shareholder with 1 000 shares receives 1 500 bonus shares 1000 x 3 2.
For example a three for two bonus issue entitles each shareholder three shares for every two they hold before the issue. 6 per share including premium and balance in two calls in equal amount. 3 per share on allotment rs.
5 per share payable as. Noor khan limited company was established with authorized capital of 100 000 shares and invited applications for 10 000 shares of 10 each at premium of rs. Forfeiture and reissue of shares journal entries.
The accounting entry for the issuance of bonus shares would be. The issue of bonus shares in payment of dividend is called capitalization of un distributed profit. In this way shareholders will get additional shares without making any further payment.
The shares thus issued are known as bonus shares. 12 00 000 and this bonus is to be paid by issue of fully paid equity shares at a premium of rs. The company declared bonus out of its reserve fund of rs.
Swan limited has a share capital of rs 20 00 000 in equity shares of rs. Being bonus utilised to issue fully paid up bonus shares illustration 1. Utilization for issue of bonus shares 2 40 000.
Utilization for issue bonus shares 30 000 profit and loss a c 3 00 000 less.
Issue of bonus shares problems with solutions. Here is a compilation of top six accounting problems on issue of shares with its relevant solutions. Problem 1 issue of shares at par journal cash book and balance sheet. A limited company issued 25 000 ordinary shares of rs. 25 each payable rs.
5 on application rs. 10 on allotment and rs. 5 each on subsequent calls 20 000 shares were. Bonus issue of shares.
Problem with solution 4. A company has a share capital of 1 00 000 equity shares of rs. 10 each fully paid. The company has a reserve fund of rs.
10 00 000 and declares a bonus of rs. This bonus is to be paid by issue of fully paid equity shares at a premium of rs. Shares are quoted at. I the bonus issue can be made only out of free reserves built out of the genuine profits or securities premium collected in cash.
Ii reserves created by revaluation of fixed assets are not available for issue of bonus shares. Iii the bonus issue cannot be made unless the partly paid shares if any existing are made fully paid up. Bonus shares are shares issued to shareholders of a company free of any cost. Bonus issue is also known as scrip issue and scrip dividends.
As an alternative to cash dividends companies at times give away free shares to their shareholders when they are short of cash and don t want to upset shareholders that expect a regular income. Accounting for bonus shares solutions to assignment problems problem n o 1 date particulars rs. Equity share final call a c dr. To equity share capital a c being the final call money due on 80 000 shares rs.
To equity share capital a c being the final call money due on 80 000 shares rs. Equity share final call a c dr. Accounting for bonus shares solutions to assignment problems problem n o 1 date particulars rs.
As an alternative to cash dividends companies at times give away free shares to their shareholders when they are short of cash and don t want to upset shareholders that expect a regular income. Bonus issue is also known as scrip issue and scrip dividends. Bonus shares are shares issued to shareholders of a company free of any cost.
Iii the bonus issue cannot be made unless the partly paid shares if any existing are made fully paid up. Ii reserves created by revaluation of fixed assets are not available for issue of bonus shares. I the bonus issue can be made only out of free reserves built out of the genuine profits or securities premium collected in cash.
Shares are quoted at. This bonus is to be paid by issue of fully paid equity shares at a premium of rs. 10 00 000 and declares a bonus of rs.
The company has a reserve fund of rs. 10 each fully paid. A company has a share capital of 1 00 000 equity shares of rs.
Problem with solution 4. Bonus issue of shares. 5 each on subsequent calls 20 000 shares were.
10 on allotment and rs. 5 on application rs. 25 each payable rs.
A limited company issued 25 000 ordinary shares of rs. Problem 1 issue of shares at par journal cash book and balance sheet. Here is a compilation of top six accounting problems on issue of shares with its relevant solutions.
