The following is an extract from Zebrex plc’s statement of financial position at 1 April 2014.
Additional information:
• On 1 June 2014 the directors decided to make a bonus issue of three ordinary shares for every four shares currently issued. The directors wished to maintain reserves in their most flexible form.
• On 30 September 2014 the directors paid a dividend of $0.20 per share on all issued shares at that date.
• On 31 March 2015 the company’s income statement showed a profit for the year of $6.7m.
a. State one reason why the directors decided to make a bonus issue of ordinary shares.
b. Calculate the number of bonus ordinary shares issued on 1 June 2014.
c. Explain why a bonus issue may be of limited benefit to a shareholder.
d. Calculate the dividend paid to ordinary shareholders on 30 September 2014.
e. Prepare a statement of changes in equity at 31 March 2015.
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