Question

Question 34

Prior to 1 July 2020, the share capital account of MAGA Ltd had a balance of $6 million, reflecting their issued capital of 1 million ordinary shares, issued at $6 and paid in full. On 1 July 2020, MAGA Ltd announce a 1-for-4 rights issue, with each new share issued under the rights scheme being sold for $20, payable in full upon accepting the offer. Costs associated with the issue amount to $1 million. Assuming that all shareholders exercise their rights in full, what will the balance of the share capital account be once the rights issue is complete? (Note: to be clear, we are looking for the dollar balance, NOT the number of outstanding shares)

		$6,250,000
		$10,000,000
		$12,000,000
		$12,250,000

Answer 1