Viram Ltd. Issued 10000 equity share of 10 each. What entries will be made in if case such issue is a at par and at premium of 20%
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Answer:
discount =10000 and premium = 20000
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In this question, we are asked to pass the journal entries.
WHEN SHARES ARE ISSUED AT PAR
Bank A/C DR 1,00,000
To Share Application A/C 1,00,000
(Being shares issued at par)
Share Application A/C 1,00,000
To Share Capital A/C 1,00,000
(Being amount transferred to share capital account)
WHEN SHARES ARE ISSUED AT PREMIUM
Bank A/C DR 1,20,000
To Share Application A/C 1,20,000
(Being shares issued)
Share Application A/C 1,20,000
To Share Capital A/C 1,00,000
To Security Premium Reserve A/C 20,00
(Being amount transferred to share capital account)
- Shares are fractional ownership interests in a corporation. Shares are a particular kind of financial instrument that certain companies use to enable the fair distribution of any declared residual profits in the form of dividends.
- A stock that does not pay dividends does not share. Instead; they look forward to furthering stock price growth as business profits rise.
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