CS Executive · Corporate Accounting and Financial Management · Accounting for Share Capital
Ananya Textiles Ltd issues 50,000 equity shares of Rs 10 each at Rs 14 per share, fully payable on application and received in full. What amount is transferred to the Securities Premium Account?
The Securities Premium Account is credited with Rs 2,00,000. The premium per share is Rs 4, being the issue price of Rs 14 less the face value of Rs 10, and it applies to 50,000 shares. Share capital of Rs 5,00,000 is credited separately.
- ARs 2,00,000Correct
- BRs 5,00,000
- CRs 7,00,000
- DRs 20,000
Explanation
Premium per share = 14 - 10 = Rs 4. Total premium = 50,000 x 4 = Rs 2,00,000. Rs 5,00,000 is the share capital, and Rs 7,00,000 is the total amount received, so including the capital portion would be wrong.
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