CD had 5,000.00 R1 ordinary shares in issue. Subsequently, CD made a right issue of 1new ordinary share at R3. 50 per share for every 5 ordinary currently held. At the same date CD's ordinary shares were trading at R4. 75.

Required :

1.explain the difference between a bonus issue and a right issues of shares.

2. Prepare the journal entries required to record CD's rights issue in its financial records, assuming that all rights were taken up