Accounting Multiple Choice Question – 27 September 2022

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A company has issued 80 000 shares of £0.50 each.

These are quoted on the stock exchange at £1.60 each.

The company makes a rights issue on a 1 for 4 basis at a price of £1.20 each.

What is the balance on the Share Capital account after the rights issue?

Select ONE answer:

  1. £50 000
  2. £100 000
  3. £120 000
  4. £160 000

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 1

  1. Correct – 1 in 4 rights issues = 80,000 shares / 4 = 20,000 * 50p = £10,000 + £40,000 = = > £50,000
  2. Not correct
  3. Not correct
  4. Not correct

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