4000 equity shares of Rs.10 each were issued at 8%premium to the promoted of a company for their services.which account will be debited?(A) share capital account (B) Goodwill account/incorporation cost account (C) securities premium reserve account (D) cash account.
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I think b but not sure sorry
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The Premium of 8% at which the shares were debited will be debited to (C) securities premium reserve account.
- Any amount if a share is issued at a premium will be credited to the securities premium reserve account. This is because the premium amount is not a part of the share capital.
- The securities premium reserve will come under the reserve and surplus under the liabilities side in the balance sheet.
- The Premium amount is not shared capital but gains for the company.
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