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Ravi Ltd. Co. have issued 30,000 shares of 20 each on 10% premium. All the money due on application. All the money duly received. Pass Journal entries in the bools of Ravi Limited Company. [ Ans. Amount Received on Applications * 6.60.000 * 60,000 Securities Premium Reserve?
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Ravi Ltd. Co. have issued 30,000 shares of 20 each on 10% premium. All...
Journal Entries for Issuing Shares at a Premium
The journal entries for Ravi Ltd. Co. issuing 30,000 shares of 20 each on 10% premium are as follows:
1. For receiving applications:
Bank Account Dr. 6,00,000
To Share Application Account 6,00,000
2. For allotment of shares:
Share Application Account Dr. 6,00,000
Securities Premium Reserve Account Dr. 60,000
To Share Capital Account 6,00,000
To Securities Premium Reserve Account 60,000
In the above journal entry, the share application account is debited with the amount received on applications, i.e. 6,00,000. The securities premium reserve account is debited with the premium amount of 10% on the face value of shares, i.e. 60,000. The share capital account is credited with the face value of shares, i.e. 6,00,000. Finally, the securities premium reserve account is credited with the premium amount of 10% on the face value of shares, i.e. 60,000.
Explanation of Securities Premium Reserve
The securities premium reserve is a reserve account created by a company to record the amount of premium received on the issue of shares. The premium is the amount received over and above the face value of shares. The securities premium reserve can be used for various purposes, such as issuing bonus shares, writing off preliminary expenses, or adjusting the debit balance in the profit and loss account.
The securities premium reserve is shown on the liabilities side of the balance sheet under the head "Reserves and Surplus". It is not a part of the share capital of the company and cannot be distributed as dividend to shareholders.
Conclusion
Issuing shares at a premium is a common practice followed by companies to raise capital. The securities premium reserve is a reserve account created by a company to record the amount of premium received on the issue of shares. The journal entries for issuing shares at a premium involve debiting the share application account with the amount received on applications and the securities premium reserve account with the premium amount. The share capital account is credited with the face value of shares, and the securities premium reserve account is credited with the premium amount.
The journal entries for Ravi Ltd. Co. issuing 30,000 shares of 20 each on 10% premium are as follows:
1. For receiving applications:
Bank Account Dr. 6,00,000
To Share Application Account 6,00,000
2. For allotment of shares:
Share Application Account Dr. 6,00,000
Securities Premium Reserve Account Dr. 60,000
To Share Capital Account 6,00,000
To Securities Premium Reserve Account 60,000
In the above journal entry, the share application account is debited with the amount received on applications, i.e. 6,00,000. The securities premium reserve account is debited with the premium amount of 10% on the face value of shares, i.e. 60,000. The share capital account is credited with the face value of shares, i.e. 6,00,000. Finally, the securities premium reserve account is credited with the premium amount of 10% on the face value of shares, i.e. 60,000.
Explanation of Securities Premium Reserve
The securities premium reserve is a reserve account created by a company to record the amount of premium received on the issue of shares. The premium is the amount received over and above the face value of shares. The securities premium reserve can be used for various purposes, such as issuing bonus shares, writing off preliminary expenses, or adjusting the debit balance in the profit and loss account.
The securities premium reserve is shown on the liabilities side of the balance sheet under the head "Reserves and Surplus". It is not a part of the share capital of the company and cannot be distributed as dividend to shareholders.
Conclusion
Issuing shares at a premium is a common practice followed by companies to raise capital. The securities premium reserve is a reserve account created by a company to record the amount of premium received on the issue of shares. The journal entries for issuing shares at a premium involve debiting the share application account with the amount received on applications and the securities premium reserve account with the premium amount. The share capital account is credited with the face value of shares, and the securities premium reserve account is credited with the premium amount.
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Ravi Ltd. Co. have issued 30,000 shares of 20 each on 10% premium. All the money due on application. All the money duly received. Pass Journal entries in the bools of Ravi Limited Company. [ Ans. Amount Received on Applications * 6.60.000 * 60,000 Securities Premium Reserve?
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Ravi Ltd. Co. have issued 30,000 shares of 20 each on 10% premium. All the money due on application. All the money duly received. Pass Journal entries in the bools of Ravi Limited Company. [ Ans. Amount Received on Applications * 6.60.000 * 60,000 Securities Premium Reserve? for Class 12 2024 is part of Class 12 preparation. The Question and answers have been prepared according to the Class 12 exam syllabus. Information about Ravi Ltd. Co. have issued 30,000 shares of 20 each on 10% premium. All the money due on application. All the money duly received. Pass Journal entries in the bools of Ravi Limited Company. [ Ans. Amount Received on Applications * 6.60.000 * 60,000 Securities Premium Reserve? covers all topics & solutions for Class 12 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Ravi Ltd. Co. have issued 30,000 shares of 20 each on 10% premium. All the money due on application. All the money duly received. Pass Journal entries in the bools of Ravi Limited Company. [ Ans. Amount Received on Applications * 6.60.000 * 60,000 Securities Premium Reserve?.
Ravi Ltd. Co. have issued 30,000 shares of 20 each on 10% premium. All the money due on application. All the money duly received. Pass Journal entries in the bools of Ravi Limited Company. [ Ans. Amount Received on Applications * 6.60.000 * 60,000 Securities Premium Reserve? for Class 12 2024 is part of Class 12 preparation. The Question and answers have been prepared according to the Class 12 exam syllabus. Information about Ravi Ltd. Co. have issued 30,000 shares of 20 each on 10% premium. All the money due on application. All the money duly received. Pass Journal entries in the bools of Ravi Limited Company. [ Ans. Amount Received on Applications * 6.60.000 * 60,000 Securities Premium Reserve? covers all topics & solutions for Class 12 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Ravi Ltd. Co. have issued 30,000 shares of 20 each on 10% premium. All the money due on application. All the money duly received. Pass Journal entries in the bools of Ravi Limited Company. [ Ans. Amount Received on Applications * 6.60.000 * 60,000 Securities Premium Reserve?.
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