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

Preparation of financial statements — practice question

The company gives the following data: ordinary shares of $0.50 each $84\,000 retained earnings $50\,000 total $134\,000 The following transactions then occur. 1 The company carries out a rights issue of one new ordinary share for every two held, at $1.30. The issue was fully subscribed. 2 A bonus issue of two new ordinary shares for every three held was then carried out. What is the maximum possible balance of the retained earnings after these transactions?

  • A$8\,400
  • B$16\,800
  • C$33\,200
  • D$41\,600

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