Paper 3 · Statement of changes in equity / impairment

After a bonus issue, Karimba Limited had 2 800 000 ordinary shares of $0,50 each in issue. The directors then made a rights issue of one new share for every five shares now held, at a price of$ 0,70 per share. What were the total cash proceeds from the rights issue?

Model answer

$392000

Also accepted: 392000, $392 000, 392 000, $392,000, 392,000

Explanation: Rights shares = 2 800 000 / 5 = 560 000 shares. Proceeds = 560 000 x

0,70 =

392 000.

Derived from ZIMSEC Accounting Paper 3, June 2019, Q1

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