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

Preparation of financial statements — practice question

A company’s capital and reserves are as follows: ordinary shares of $1$ each $400\,000$, share premium account $60\,000$, revaluation reserve $120\,000$, general reserve $300\,000$, retained earnings $90\,000$. The company intends to carry out a bonus issue of one share for every four held. What is the greatest amount of distributable reserves that the company can have after the bonus issue?

  • A$290\,000$
  • B$300\,000$
  • C$350\,000$
  • D$390\,000$

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