Accounting Multiple Choice Question – 28 January 2023

Alex plc has the following capital structure:

• 50,000 ordinary £10 shares – £500,000
• 1,000,000 5% convertible loan stock – £1,000,000

One half of the loan stock holders converted at the rate of three new ordinary shares of £10 each per £100 of loan stock.

How many new ordinary shares were issued?

Select ONE answer:

1. 15,000
2. 150,000
3. 200,000
4. 300,000

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 = = > 500,000 convertible loan stock / 100 = 5,000 * 3 = 15,000
2. Not correct
3. Not correct
4. Not correct

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