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QUESTION 

Bonus issue

 

CLARKE FRINGLAND CO 

STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 20X3 (EXTRACT) 

 

$ 

 

Share capital (50c) 

 

10,000 

 

Share premium 

 

7,000 

 

Retained earnings 

 

  8,000 

 

 

25,000 

Clarke Fringland Co has decided on a bonus issue of shares of 1 for 4 and will use the share premium 

account for this purpose. 

Required 

What is the double entry to record the bonus issue of shares and what is the adjusted financial position 

extract after the bonus issue? 

ANSWER 

There are 20,000 ($10,000 ÷ 50c) shares before the bonus issue. Each shareholder will receive 1 

share for every 4 held, so 5,000 (20,000 ÷ 4 

×

 1) new shares will be issued. 

The double entry is: 

DEBIT  

Share premium 

$2,500 

 

($5,000 

×

 50c) 

CREDIT  

Share capital   

 

$2,500 

ADJUSTED STATEMENT OF FINANCIAL POSITION  

 

      $ 

 Share capital (50c) 

 12,500 

 Share premium 

 4,500 

 Retained earnings 

   8,000 

 

  25,000