Wondered if you can look at these workings to see if I am on the right wavelength please. I have got a trial balance 31 Dec 2008. Ordinary 50p share capital 145000.The question is during Feb the company offered a rights issue of 1 for 5 to its current shareholders. The offer price was 75p per share. It was taken up in full.My workings as follows 290,000/5 = 58000
Amount going to share capital 58000*0.5=29000
Amount going to share premium 58000*0.25=14500
The company paid an interim dividen of 1.5 per share on 15 june 2008 and a final dividend was announced on the 21 dec 2008 worth 3.5 per share. This is where I am getting stuck, for the interim dividend i got 348000*1.5 and the final dividend 348000*3.5. Am i on the right wavelength. Many thanks Sue
Usually rights issues are at less than current price. Offering at above means that there's going to be no bonus element.
By my calculation the post issue price per share will be 54p. So assuming that the shares remain as 50p shares then there will be a share premium of £14,500.
Don't have a lot of time at the moment but I'll try to check in again later to see what others views are on this.
All the best,
Shaun.
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Its Friday night so I'm bound to have missed something silly out of my calculations. Hope that it serves as a pinter in the right direction though.
kind regards,
Shaun.
P.S. don't forget that the dividends are time apportioned to the shares in issue at the time so two months of 290k and ten months of 384k.
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Many thanks for your detailed reply feel quite good I got some of the workings right, just got confused on the dividend payments, see what you mean by the dividends being time apportioned. On the ten months is it 384k/10= 3840. This is an A Level question my tutor sent for additional practice, must say it did test my brain cells just a tad. Much appreciated for your help. Sue
sounds as though A level accounting is quite interesting.
Didn't realise that you were also doing those questions or I would have advised yet another book for your collection (trust me, following this career path you will end up with a LOT of books).
Advanced Accounting for A2 by Ian Harrison.
This was one of those spur of the moment purchases for me. Found it on the shelf in Foyles whilst spending a couple of hours sorting the wheat from the chaff amongst accountancy texts and was quite impressed with it. (there are a lot of far more expensive books out there that don't come close to this one).
Compared to the David cox book this one should really only be regarded as further question practice as Cox covers the same material in more depth. Its also not in the same ball park as the ACCA texts but it's still worth considering if your looking for another book with lots of question practice.
Here's a link to the book on Amazon. It's one of those where you can have a look around inside before you buy.
They seem to have changed the format since my version (2005) the questions seem identical but unfortunately it's also been updated from UKGAAP to IFRS so looks like one of those where there is little point in purchasing an out of date copy.
Good book, lots of question practice.
talk soon,
Shaun.
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Thanks for recommending another book for my studies, just bought David Cox As and A2 books, must say I really get on with these books they are explained so well and plenty of exercises to test your knowledge. I don't think the ICB route is for me,so have just started doing A Level in accounting as it covers AS introduction to Financial Accounting, Financial and Management Accounting, A2 covers Further Aspects of Financial Accounting and Further Aspects of Management Accounting. It seems more of an overall qualification for me as it covers Manufacturing accounts, marginal, absorption and activity based costing, budgeting,standard cost and variance analyis all of which besides trading and profit and loss accounts these other subjects do interest me. It's a two year course, and looking forward to learning new concepts. Any other books you know of to help my studies, would be much appreciated. You are such a big help to others on this forum. Also as I extend my knowledge, I hope to be of some use to others on this great forum. Kind Regards Sue
