thisisbrianly

I think varundarji might be confused about the nature of the bonus issue transaction.

The accounting double entry should be of some help.

When a company announces a bonus issue, it capitalizes a part of its share premium account.

i.e. Share Premium Acc Debit
Share Capital Acc Credit

Thats how the share capital increases.

If the share premium account reaches a nil balance, the retained earnings reserve is used for this purpose.