Paper 2 · cash budgeting

A company plans to issue 20 000 ordinary shares of $1 each in October at an issue price of$ 1.20 per share. Calculate the total cash proceeds expected from the share issue.

20 000, calculated as 20 000 shares at

1.00 each.

4 000, calculated as 20 000 shares at

0.20 each.

22 000, calculated as 20 000 shares at

1.10 each.

24 000, calculated as 20 000 shares at

1.20 each.

Explanation: Proceeds from a share issue are the number of shares issued multiplied by the actual issue price received, not the nominal (par) value alone. 20 000 shares x

1.20 =

24 000. Using the

1 nominal value only gives

20 000, and using just the

0.20 premium gives

4 000, both of which omit part of the total cash actually received.

Derived from ZIMSEC Accounting Paper 2, specimen 2026, Q1

A company plans to issue 20 000 ordinary shares of $1 each in October at an issue price of$ 1.20 per share. Calculate the total cash proceeds expected from the share issue.

More questions from this paper

Get the full paper, not just one question

A company plans to issue 20 000 ordinary shares of 1eachinOctoberatanissuepriceof1 each in October at an issue price of 1eachinOctoberatanissuepriceof1.20 per share. Calculate the total cash proceeds expected from the share issue.

More questions from this paper

Get the full paper, not just one question

A company plans to issue 20 000 ordinary shares of $1 each in October at an issue price of$ 1.20 per share. Calculate the total cash proceeds expected from the share issue.