Question

Sheba Ltd.’s statement of financial position shows ordinary share capital of £150,000 and share premium of £50,000 at the beginning of a financial year. If the ordinary share capital is £250,000 and share premium is £120,000 at the end of the financial year, how much did the ordinary share issue raise? Select one:

a. £100,000
b. £250,000
c. £370,000
d. £170,000

Answer 1

Sheba Ltd. raised £170,000 from the ordinary share issue, by summing the increases in ordinary share capital and share premium during the financial year.

Step-by-step explanation:

The ordinary share issue raised by Sheba Ltd. can be calculated by comparing the increase in ordinary share capital and share premium from the beginning to the end of the financial year. The ordinary share capital increased by £100,000 (from £150,000 to £250,000), and the share premium increased by £70,000 (from £50,000 to £120,000). Therefore, the total amount raised by the ordinary share issue is the sum of these increases, which is £170,000 (£100,000 from share capital and £70,000 from share premium).