Paper 2 · Company accounts - share capital and redemption

Green Limited had 140,000 ordinary shares of $1 each in issue. On 30 June 2015 it made a rights issue of one new ordinary share for every ten ordinary shares held, at a price of$ 1.60 per share. Calculate the total cash proceeds from the rights issue.

Model answer

22400

Also accepted: $22,400, 22,400, $22400

Explanation: New shares issued = 140,000 ÷ 10 = 14,000 shares. Proceeds = 14,000 ×

1.60 =

22,400.

Derived from ZIMSEC Accounting Paper 2, June 2018, Q2

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