1. On 31 December 2020 a companys capital structure was as follows: Ordinary share capital OMR 7,500,000...

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Question:

1. On 31 December 2020 a company’s capital structure was as follows:

Ordinary share capital OMR 7,500,000 shares of 0.800 baize each.

Share premium account OMR100000

A. During the year ended 31 December 2020, the company made a rights issue of 2 share for every 1 held at OMR 1 per share and this was taken up in full.

B. Later in the year, the company made a bonus issue of 3 share for every 1shares held, using the share premium account for the purpose.

Journalize the following transactions and show the working along with the abstract of balance sheet.

2. ABA SAOG has been incorporated in the year 2020 with an authorized capital of OMR 8,000,000 divided into equity shares of OMR 0.800 each. For the purpose of incorporation, the company came up with an IPO of 2,500,000 shares at an issue price of OMR 1.750. The IPO was fully taken up.
In the year 2020 the following adjustments took place:

•The company had following balances in its reserves and surplus:
OMR

Share Premium 50,000

Revaluation Reserve 80,000

Capital Reserve 40,000

Retained Profits 180,000

A • The company came up with a right issue in Jan 2018 in the ratio of 1:5 at an issue price of OMR 2.225, whereas the market value of shares is OMR 3.000. 40% of shareholders have rejected this offer.
B • In June, the company declared a bonus issue in the ratio of 1:7.
C • In September, the company managed to acquire a property for its new project from SM developers. The deal was finalized at OMR 250,000, but the developers insisted on settlement in equity shares. The company issued 100,000 equity shares.
D • In December, the company decided to split shares and the face value of each share was reduced to 500 baiza. Such decision was made in order to control the market price.

You required to pass necessary journal entries, support your answers with necessary working notes and prepare and abstract of balance sheet showing Equity only.