Accounting 9706 · AS & A Level · Preparation of financial statements

Preparation of financial statements — practice question

The company’s equity is composed as follows. $100000$ ordinary shares of $\$0.25$ each: $25000$. Share premium: $3000$. Retained earnings: $8000$. These events then occurred: 1 A bonus issue of one ordinary share for every five held was made. 2 Six months later a rights issue of one ordinary share for every four held was made. The shares were issued at $\$0.30$ each. By what amount did the company’s equity rise as a result of these transactions?

  • A$5000$
  • B$6000$
  • C$7500$
  • D$9000$

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