Paper 3 · June 2019 · Statement of Changes in Equity
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
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