Tammy Plc Has Made a Rights Issue of 2 Million

question 6

Multiple Choice

Tammy Plc has made a rights issue of 2 million new ordinary shares for cash. Each ordinary share of the company has a par value of 50 pence. The current share price is 450 pence and the rights issue price is 320 pence. What is the correct double entry required to record this transaction in the company's books of account?

• A) Debit cash £1,000,000
• B) Debit cash £6,400,000
• C) Debit cash £7,400,000
• D) Debit cash £9,000,000

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Definitions:

Negative Reinforcer

An unfavorable event or outcome that, when removed after a behavior, increases the frequency of that behavior in the future.

Stockbroker

A professional who executes buy and sell orders for stocks and other securities on behalf of clients in exchange for a fee or commission.

Stress Level

This refers to the intensity of stress which is the physiological and psychological strain or tension a person feels in response to life's demands.

Primary Reinforcer

A stimulus that is inherently rewarding and satisfies a biological need, leading to an increase in the behavior that preceded it.