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

Preparation of financial statements — practice question

A company gives the following details about its equity. 150,000 shares $\$1$ each: $\$150\,000$ share premium: $\$75\,000$ general reserve: $\$125\,000$ retained earnings: $\$25\,000$ The directors suggest a bonus issue of shares on the basis of one $\$1$ share for each three shares already owned. After that, the directors plan a rights issue on the basis of one new $\$1$ share for every four shares held, with a premium of $\$0.20$ per share. What will the company’s total equity be after the share issues?

  • A$\$425\,000$
  • B$\$435\,000$
  • C$\$475\,000$
  • D$\$485\,000$

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