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 ríghts 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 ríghts 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
Chapter20: Financing With Derivatives
Section: Chapter Questions
Problem 12P
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Transcribed Image Text: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 ríghts 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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