Question: ABC SAOG declared a 3 for 2 bonus issue. The following is the abstract of SOFP before the bonus issue: Share capital consisting of ordinary

ABC SAOG declared a 3 for 2 bonus issue.

The following is the abstract of SOFP before the bonus issue:

Share capital consisting of ordinary shares of RO 0.500 each, RO 2,000,000

Share Premium Account RO 1,000,000

Revaluation Reserve RO 1,500,000

General Reserve RO 800,000

Retained Profits RO 5,000,000

The Companys policy for the purpose of accounting for bonus issue is not to use revaluation reserve whereas retained profits should only be used if other reserves are exhausted.

State the journal entries required to account for the above transactions and prepare extract of the SOFP after bonus issue.

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