Page 184 - F3 -FA Integrated Workbook STUDENT 2018-19

Chapter 13

Example 1

Issue at market price

Campbell Co currently has the following issued share capital and other
components of equity:

Original Updated
$000 $000
Issued share capital @ $0.50 each 2,000 2,500

Share premium 1,000 3,000

Revaluation surplus 3,000 3,000
Retained earnings 8,000 8,000
––––– –––––

Total equity 14,000 16,500
––––– –––––

Campbell Co needed to raise additional finance and made an issue of shares
for cash. Campbell Co issued 1 million equity shares, each with a nominal
value of $0.5 at $2.50 per share.

Required:

State the accounting entries required to account for the share issue and
prepare an updated summary of Campbell Co’s issued share capital and
other components of equity.

Solution

$000
Debit Cash received 2,500 1,000 × $2.5

Credit Equity share capital @ $0.5 each 500 1,000 × $0.5
Credit Share premium 2,000 1,000 × $2.0

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