CIMA BA3 · Chapter 12 · Question 7 of 10
A company's share capital increased from $50,000 to $80,000 during the year and its share premium from $20,000 to $28,000. During the year there was a bonus issue of $10,000 financed from share premium, and the rest of the increase came from an issue of shares for cash. What cash was received from the issue of shares?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) $38,000
Explanation
The bonus issue moved $10,000 from share premium to share capital with no cash. Cash shares: share capital increase $30,000 - bonus $10,000 = $20,000; share premium increase $8,000 + $10,000 used for the bonus = $18,000. Cash received = $20,000 + $18,000 = $38,000. This equals the combined increase in share capital and share premium, because the bonus issue has no net effect on the two accounts together.
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