Suppose a company issues:

100,000 Ordinary Shares at PAR= $2. Market Value = $6 per Ordinary Share:

100,000 Preference Shares at PAR= $5. Market Value = $6 per Preference Share.

The two share issues take place at the same time.

The company receives $1,000,000 for the combined share issue (i.e., for both the Ordinary and Preference Shares).

Using the Proportional Method, the pro-rata proceeds of the share issue are divided between the two share categories as follows:

Select one:

a. Ordinary Shares Total = $600,000. Preference Shares Total: $500,000

b. Ordinary Shares Total = $600,000. Preference Shares Total: $600,000

c. Ordinary Shares Total = $500,000. Preference Shares Total: $500,000

d. None of these answers

e. Ordinary Shares Total = $500,000. Preference Shares Total: $600,000