Company ABC has in issue 5 million, RO 1 equity shares fully paid up with a...

 

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Company ABC has in issue 5 million, RO 1 equity shares fully paid up with a current market value of RO 3.5 each. Before such issue It has a balance of RO 100,000 in its share premium account and RO 75,000 in its bank account. It wants to raise additional capital by issue of equity shares. It decided to offer a rights issue of 1 for 5 shares at an offer price of RO 3 each. The offer is only taken by 60% of Shareholders. Journalize the given entries show the necessary calculations and also the abstract of Balance sheet after such issue and calculate the theoretical ex-right price for the above scenario Company ABC has in issue 5 million, RO 1 equity shares fully paid up with a current market value of RO 3.5 each. Before such issue It has a balance of RO 100,000 in its share premium account and RO 75,000 in its bank account. It wants to raise additional capital by issue of equity shares. It decided to offer a rights issue of 1 for 5 shares at an offer price of RO 3 each. The offer is only taken by 60% of Shareholders. Journalize the given entries show the necessary calculations and also the abstract of Balance sheet after such issue and calculate the theoretical ex-right price for the above scenario

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1 Journal entries for Right issue of shares Dr Shareholder Ac 3000000 Cr Share cap... View the full answer