At 1 July 2004 a limited liability company’s capital structure was as follows:
                                                                                      $
Share capital 1,000,000 shares of 50c each            500,000
Share premium account                                            400,000
In the year ended 30 June 2005 the company made the following share issues:
1 January 2005
A bonus issue of one share for every four in issue at that date, using the share premium account.
1 April 2005
A rights issue of one share for every ten in issue at that date, at $1·50 per share.
What will be the balances on the company’s share capital and share premium accounts at 30 June 2005 as a
result of these issues?
   Share capital             Share premium account
            $                                       $
A     687,500                            650,000
B     675,000                            375,000
C     687,500                            150,000
D     687,500                            400,000

D