Cash received from fully subscribed rights issue equals issued share capital nominal value

Steps:

• Total issued shares after rights issue: 5,000 shares of £1 each, so £5,000 nominal capital.
• Rights issue ratio (1 new for 3 old) confirms full subscription adds to total capital shown.
• Issue at £1 nominal + 50p premium means cash covers nominal for new shares, but total debit reflects overall capital receipt.
• Bank debited with £5,000 as the nominal value of issued capital post-subscription.

Why C is correct:

• Under company law, cash inflow debits bank with nominal value of fully subscribed issued share capital (£5,000), crediting share capital account.

Why the others are wrong:

• A. 3000: Underestimates total issued capital; possibly confuses with partial subscription.
• B. 4000: Incorrect total; ignores full 5,000 shares post-issue.
• D. 6000: Overstates by adding unrelated premium or misapplying ratio.

Final answer: C