Day: April 15, 2021

The capital structure of a company is given:

• 300 000 ordinary shares of £0.50  —  150,000 
• Reserves  —  £85,000
• 10% debentures 2024 – 2025  —  £60,000

The company then issues £20,000 8% debenture stock 2028 – 2030, followed by the issue of bonus shares on a one for three basis.

Finally it makes a rights issue of 1 ordinary share for every two already held at £0.80 per share.

How will these transactions affect the Balance Sheet? 

Select ONE answer:

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 2

1. Not correct
2. Correct
3. Not correct
4. Not correct

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