Lesson eLearning

A company issues 15,000 equity shares of ₹20 each at ₹22 per share. Prepare the journal entry for the issue of shares.

easy 2 marks Class 12 · Accountancy · Accounting for Share Capital
Answer
Bank A/c Dr ₹330,000; Share Premium A/c Cr ₹30,000; Share Capital A/c Cr ₹300,000.

The correct answer is Bank A/c Dr ₹330,000; Share Premium A/c Cr ₹30,000; Share Capital A/c Cr ₹300,000. — Credit Share Premium A/c with the premium ₹30,000.

Step-by-step solution

  1. Calculate cash received: 15,000 × ₹22 = ₹330,000.
  2. Calculate nominal value of shares: 15,000 × ₹20 = ₹300,000.
  3. Find share premium: ₹330,000 – ₹300,000 = ₹30,000.
  4. Debit Bank A/c with the cash received ₹330,000.
  5. Credit Share Capital A/c with the nominal amount ₹300,000.
  6. Credit Share Premium A/c with the premium ₹30,000.
Common mistake: Ignoring the share premium amount while recording the entry.

Concept tested: Issue of shares at premium

Published · How this solution was prepared and checked

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