Paper 3 · November 2014 · business purchase, share issues and statement of financial position

Digits Ltd had 160,000 ordinary shares of $1 each in issue when, on 16 September 2005, it made a one for four bonus issue. Calculate the nominal value of the bonus shares issued.

Model answer

40000

Also accepted: $40 000, 40 000

Explanation

One bonus share for every four held: 160,000 / 4 = 40,000 shares of $1 each, a nominal value of $40,000.

Derived from ZIMSEC Accounting 9197/3 Paper 3 (Case Study), November 2014, Q1

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