Accounting 9706 · AS & A Level · The accounting system

The accounting system — practice question

An extract taken from a company’s statement of financial position gave the details below. issued share capital: $2$ million ordinary shares of $0.50$ each: $1000$ share premium balance: $600$ retained earnings balance: $2400$ The directors have decided to make a bonus issue of $3$ ordinary shares for $4$ shares held. They want the reserves to remain in their most flexible form. Which debit entry ought to be recorded in the retained earnings account?

  • A$150000$
  • B$750000$
  • C$900000$
  • D$1500000$

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