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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?
The bonus issue is an issue of free shares and therefore has no cash affect and you should not have subtracted the 10.
but 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?
If 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)).
if there had been a bonus issue of 500,000 shares of $1 each ( i forgot this part)
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