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

Preparation of financial statements — practice question

A company shows the following capital and reserves. Ordinary shares of $1$ each, fully paid: $1\,250\,000$ Share premium account: $100\,000$ Revaluation reserve: $200\,000$ General reserve: $150\,000$ Retained earnings: $210\,000$ The company policy is to keep reserves in the form that is most flexible. The company carries out a $1$-for-$5$ bonus issue. What is the highest amount of distributable reserves remaining after the bonus issue?

  • A$110\,000$
  • B$310\,000$
  • C$360\,000$
  • D$410\,000$

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