1.23 Could someone please explain how its solved? How is the amount above par value is 4? And where does this formula come from?
Q1.23 Hi salj67 The par value of the shares is £1 each. The sale price is £5 each. The difference is £4 per share - ie the shares are selling at £4 above par. There are 40,000 new shares, so this raises £200,000 altogether. The par value per share gets added to the share capital - ie 1 x 40,000 = £40,000 The difference between sale price and par value gets added to the share premium account - ie 4 x 40,000 = £160,000 Hope that helps Best wishes Stuart Stuart Underwood ActEd Tutor
