On August 1, 2021, Comical Company issued rights to stockholders to subscribe to additional share of its common stack. A stockholder can buy one new share for every 5 rights plus P25 cash. The rights will expire on October 1, 2021. On July 31, 2021, the market price of a share with the right attached was P50, while the market price of the right alone was P5. Comical's equity on July 31, 2021, comprised of the following Ordinary Shares, P10 par- P4,000,000 Subscribed ordinary shares-1,000,000 Share premium-600,000 Retained earnings-200,000 Treasury shares, 80,000 shares -1,750,000 What is the effect on the stockholders' equity as a result of the issuance of stock rights? A. 500,000 increase B. 2,500,000 increase C.no change D.200,000 increase
On August 1, 2021, Comical Company issued rights to stockholders to subscribe to additional share of its common stack. A stockholder can buy one new share for every 5 rights plus P25 cash. The rights will expire on October 1, 2021. On July 31, 2021, the market price of a share with the right attached was P50, while the market price of the right alone was P5. Comical's equity on July 31, 2021, comprised of the following Ordinary Shares, P10 par- P4,000,000 Subscribed ordinary shares-1,000,000 Share premium-600,000 Retained earnings-200,000 Treasury shares, 80,000 shares -1,750,000 What is the effect on the stockholders' equity as a result of the issuance of stock rights? A. 500,000 increase B. 2,500,000 increase C.no change D.200,000 increase
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On August 1, 2021, Comical Company issued rights to stockholders to subscribe to additional share of its common stack. A stockholder can buy one new share for every 5 rights plus P25 cash. The rights will expire on October 1, 2021. On July 31, 2021, the market price of a share with the right attached was P50, while the market price of the right alone was P5. Comical's equity on July 31, 2021, comprised of the following
Ordinary Shares, P10 par- P4,000,000
Subscribed ordinary shares-1,000,000
Share premium-600,000
Retained earnings -200,000
Treasury shares, 80,000 shares
-1,750,000
What is the effect on the stockholders' equity as a result of the issuance of stock rights?
A. 500,000 increase
B. 2,500,000 increase
C.no change
D.200,000 increase
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