The extract from the statement of financial position of Nemo Bhd as at December is given below.
Nemo Bhd
Statement of Financial Position as at December xExtract
Equity and reserves
Issued and fully paidup capital
ordinary shares, fully paid up
Retained profits
Due to the liquidity problem faced by the company, the directors decided to give to the shareholders share dividend
of one ordinary share for every ten ordinary shares held and the retained profit was to be used for this purpose.
At the same time, Nemo made a rights issue of shares to the existing shareholders at RM each. The
market price of the share was RM each.
Required:
Show the journal entries to record the transactions and prepare the statement of financial position after the
completion of the transaction.