The following is the capital structure of Kioko Co Ltd.
Shs
Ordinary share capital
100,000 shares @ shs 10 1,000,000
Share premium 500,000
Retained earnings 800,000
Total capital employed 2,300,000
Kioko Co. Ltd intends to declare a stock dividend of 10% on its ordinary shares such
that it will give 1 share for 10 at shs 10.
Required
i) Compute the number of new ordinary shares arising out of this issue.
ii) Prepare different accounts arising out of this issue.
iii) Show the new capital structure after this issue.