During its accountingyear ending on December 31, 2007 the Zeal Pak Company had the cash sales Rs.280,000, the cost of goods sold Rs. 145,000 and the operating expenses of Rs. 50,000. Thecompany paid the Rs. 5,000 interest on debentures and tax @ 35%. The company furtherreported that the debtors on January 01, 2007 was Rs. 110,000,cash received from debtorduring the year Rs.60,000 and the debtor at December 31st 2007 was Rs.270,000.
At the year ending on31stDecember, 2006 the company had the netProfit after tax Rs. 155,000 and 20,000ordinary shares in issue. On January 1, 2007, Zeal Pak Co.issued 10% preference sharesof Rs. 150,000. On June 30, 2007 it proposed to make a 1 for5 rights issue at aprice of Rs. 4 per share. The market value of existing shares onJune 30, 2007, before the issueis made, was Rs. 6.
You arerequired to:
a) Prepare the Incomestatement for the year ending on 31st December 2007.
b) Profit availablefor distribution to the ordinary share holder at the year ending on 31st December 2007.
c) Calculate theoretical ex-rights price
d) Identify the bonuselement in rights issue
e) Calculate theweighted average number of shares in the year 2006 and2007.
f) Earning per sharefor the year 2007 and its corresponding figure for 2006.