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rights issue...see the entries - Printable Version

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rights issue...see the entries - maani - 12-31-2004 10:34 PM

drsundry shareholders
crord. share capital
share premium

drcash
crsundry shareholders

drbonus share dividend
sundry shareholders

u ppl will find these enrtries in all Pk writers for rights issue
but they doesn't make sense

the only entry should be

drcash
crord. share capital
share premium

which one is correct

Ace


- Shahid_fss - 01-18-2005 01:31 AM

Entries
Right issue are shares but the ownership of these shares is transferred to the shareholders before handing these over to them.
When the ownership is transferred, we say that the right is transferred (that's why they are called right issue) and the first entry is passed. Rights are issued to the all share holders (it is pre decided in AGM i.e. 5 rights for 1 already held etc). The second entry is passed when shareholders pay for them. As the shares (Rights) are issued at a low price so the difference is considered as BONUS and the third entry is passed.

You have another topic of Right issue. If u have not checked it then check it please. U may find your answer. Word "Right" is also explained there.

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- maani - 01-19-2005 06:50 PM

Hi...the first group of entries are from Sohail Afzal's and M.A Ghani's bookz...and i couldn't understand where we will close the
"bonus share dividend account"...
Aur waisay bhi foreign authors aur some of Pk authors do not follow these accounting entries...the only correct entry is

Drcash
Crshare capital
Crshare premium

Ace