Ambiguous accounting treatment for bonus issue prevents clear solution Steps:

• Calculate number of shares: Ordinary shares $200,000 at$40 par = 5,000 shares.
• Calculate bonus shares: 3/8 × 5,000 = 1,875 shares.
• Nominal value of bonus shares: 1,875 × $40 =$75,000 (must transfer from reserves to share capital).
• Total pre-issue reserves: $20,000 +$82,500 = $102,500; post-issue must be$102,500 – $75,000 =$27,500. Why C is correct:
• Not enough information: Option C shows reserves totaling $132,500 (increased by$30,000), violating conservation of equity in a bonus issue (no new resources added). Why the others are wrong:
• A: Reserves total $87,500 (decreased by$15,000, not $75,000 required).
• B: Reserves total $132,500 (unexplained increase).
• D: Reserves total $162,500 (unexplained increase).

Final answer: Not enough information.