6.20 LO3 Efford Ltd has the following equity capital at year-end.

Ordinary shares of $0.50 each $200,000 Revaluation reserve 50,000 General reserve 80,000 Retained profits 62,000

$392,000 In addition, the company has 400,000 $1 8% preference shares in issue. The board of directors wishes to eliminate the company’s reserves. It has decided to make an immediate one-for-two bonus issue of ordinary shares. Following the issue, an annual dividend will be paid to shareholders.

What will be the required:

1 transfer from revenue reserves to effect the bonus issue?