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- This topic has 6 replies, 2 voices, and was last updated 7 years ago by John Moffat.
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- September 21, 2016 at 8:28 pm #341274
Extracts from the financial statements of Deuce Co showed balances as follows:
2009 2008
$1 Share capital 300,000 120,000
Share premium 260,000 100,000a bonus issue of 1 share for every 12 held at the 20X8 year end occured during the year and loan notes of $300,000 were issued at par. Interest of 12,000 was paid during the year. What is the cash infolow from fianncing actvities.
Sir what i did is 300+260-120-100-10(bonus issue) and add the loan 300 and get 630.
But the answer is wrong and I do not understand why?
September 22, 2016 at 3:19 am #341298The bonus issue is an issue of free shares and therefore has no cash affect and you should not have subtracted the 10.
September 22, 2016 at 7:15 am #341309but on bpp quick quiz round up they subtract the bonus issue
the question is as –
A company has a following statement –
2007 2006
Share capital 2000 1000
share premium 500 –
loan stock 750 1000if there had been a bonus issue of shares of $1 each what is the cash flow from financing activities-
they did the following
issue of share captial for cash ( 2000+500-1000-500 bonus)why did they subtract the bonus issue share here sir?
September 22, 2016 at 1:10 pm #341380If you have copied the question correctly, then they should not have!
The cash flows from financing activities is (2000 + 500 – 1000 – 250 (repayment of loan stock)).
September 22, 2016 at 2:59 pm #341389if there had been a bonus issue of 500,000 shares of $1 each ( i forgot this part)
September 22, 2016 at 3:03 pm #341391It is on page 393 of bpp book, sir. pls have a look and tell me
September 23, 2016 at 10:08 pm #341514I do not have the BPP study text and so I cannot help you – what I wrote before was correct.
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