Reference no: EM132672149

IPL Ltd (IPL) is listed on a stock exchange. A review of the company's statement of changes in owner's equity for the financial year ended 31 December 2014 shows a share capital of $500,000 and a review of the notes to accounts shows 100,000 shares outstanding.

As part of its restructuring process, the company did the following in 2015:

(a) On 30 January 2015, issued a share bonus of one share for every five shares held on that date.

(b) On 1 April 2015, the company offered its existing shareholders a right to purchase one ordinary share in the company for $4.00 per share for every eight shares held on that date. 40% of the existing shareholders subscribed to the offer. The issuance of the shares was completed on 30 April 2015.

(c) In June 2015, the company purchased 5,000 of its own shares for $3.00 per share and immediately cancelled 50% of the purchased shares. The balance 50% was held by the company for use in the company's share option scheme.

(d) In July 2015, the company split its shares into two shares for every one share held.

(e) In early October 2015, the board of directors of the company announced an interim dividend of $0.10 per share payable in cash. The book closure date is 5 December 2015.

Required

Problem (i) How much was the share capital and what was the number of shares outstanding on 31 October 2015?

Problem (ii) Determine the amount of dividend paid/payable by the company for the year ended 31 December 2015 and record the necessary journal entry/entries.

Problem (iii) Assume that there is significant demand for the company's shares and the last trading price before the split was $3.00 per share. What is the possible impact on the company's share price after the share split?