At 30 June 2002 a company’s capital structure was as follows:
                                                                          $
Ordinary share capital
           500,000 shares of 25c each             125,000
Share premium account                               100,000
In the year ended 30 June 2003 the company made a rights issue of 1 share for every 2 held at $1 per share and
this was taken up in full. Later in the year the company made a bonus issue of 1 share for every 5 held, using the
share premium account for the purpose.
What was the company’s capital structure at 30 June 2003?
Ordinary share capital                                                  Share premium account
                 $                                                                              $
A       450,000                                                                    125,000
B       225,000                                                                     250,000
C       225,000                                                                     325,000
D       212,500                                                                     262,500

B
A All rights issue proceeds added to share capital
Bonus issue 75,000
B 125,000 + 62,500 + 37,500; 100,000 + 187,500 – 37,500 (correct)
C As B, but bonus issue added to share premium
D Bonus issue does not allow for previous issue.