The table sets out a company’s equity. ordinary shares of $1.00 each $200 000 share premium account $80 000 revenue reserves $160 000 The following changes are then to be made to the equity, in the order shown: • a one-for-one bonus issue of ordinary shares • a rights issue of 100 000 ordinary shares of $1.00 each at $1.40 per share. The company wants to keep reserves in the most flexible form. What will the equity of the company be?
- Aordinary share capital $500 000; share premium $40 000; revenue reserves $40 000
- Bordinary share capital $500 000; share premium $80 000; revenue reserves nil
- Cordinary share capital $540 000; share premium nil; revenue reserves $40 000
- Dordinary share capital $540 000; share premium $40 000; revenue reserves $40 000