Tammy Plc Has Made a Rights Issue of 2 Million

Multiple Choice

Tammy Plc has made a rights issue of 2 million new ordinary shares for cash. Each ordinary share of the company has a par value of 50 pence. The current share price is 450 pence and the rights issue price is 320 pence. What is the correct double entry required to record this transaction in the company's books of account?

A) Debit cash £1,000,000
Credit share capital £1,000,000
B) Debit cash £6,400,000
Credit share capital £1,000,000
Credit share premium £5,400,000
C) Debit cash £7,400,000
Credit share capital £1,000,000
Credit share premium £6,400,000
D) Debit cash £9,000,000