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On a share of 10 issued at a premium of 2 whole amount is called up and 7 is received .share capital account will be credited with?
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On a share of 10 issued at a premium of 2 whole amount is called up an...
When a share of stock is issued at a premium, the share capital account is credited with the face value of the share plus the premium. In this case, if a share of 10 is issued at a premium of 2 and the whole amount is called up and 7 is received, the share capital account will be credited with 10 + 2 = 12.
The face value of the share is the amount that is printed on the face of the stock certificate and represents the minimum amount that the company is willing to sell the share for. The premium is the amount by which the price of the share exceeds its face value. When a share is issued at a premium, the company receives more than the face value of the share, and this additional amount is credited to the share capital account.
In this case, the share capital account will be credited with a total of 12, which includes the face value of the share (10) and the premium (2).
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On a share of 10 issued at a premium of 2 whole amount is called up an...
Calculation of Share Capital Account
When a company issues shares at a premium, the amount received above the face value of the shares is called the premium. In this case, the shares are issued at a premium of 2.
Amount Called Up
The amount called up is the amount that the shareholders are required to pay on each share. In this case, the amount called up is the whole amount, which means the face value of the share.
Amount Received
The amount received is the actual amount that the company receives from the shareholders. In this case, the amount received is 7.
Calculation of Premium
The premium is the difference between the amount received and the amount called up. In this case, the premium can be calculated as follows:
Premium = Amount Received - Amount Called Up
Premium = 7 - 10
Premium = -3
Effect on Share Capital Account
The share capital account is a part of the shareholders' equity section of the company's balance sheet. It represents the total amount of capital invested by the shareholders.
When shares are issued at a premium, the premium amount is credited to the share capital account. Since the premium in this case is negative (-3), the share capital account will be credited with the premium amount.
Journal Entry
The journal entry to record the issuance of shares at a premium would be as follows:
Share Capital Account Dr. 10
Share Premium Account Cr. 3
Bank Account Cr. 7
Explanation:
- The Share Capital Account is debited with the face value of the shares (10) to represent the increase in share capital.
- The Share Premium Account is credited with the premium amount (-3) to represent the increase in share premium.
- The Bank Account is credited with the amount received (7) to represent the increase in cash.
Conclusion
In this case, the Share Capital Account will be credited with a premium of 3. This reflects the increase in share premium resulting from the issuance of shares at a premium. The journal entry for this transaction would be Share Capital Account Dr. 10, Share Premium Account Cr. 3, and Bank Account Cr. 7.
When a company issues shares at a premium, the amount received above the face value of the shares is called the premium. In this case, the shares are issued at a premium of 2.
Amount Called Up
The amount called up is the amount that the shareholders are required to pay on each share. In this case, the amount called up is the whole amount, which means the face value of the share.
Amount Received
The amount received is the actual amount that the company receives from the shareholders. In this case, the amount received is 7.
Calculation of Premium
The premium is the difference between the amount received and the amount called up. In this case, the premium can be calculated as follows:
Premium = Amount Received - Amount Called Up
Premium = 7 - 10
Premium = -3
Effect on Share Capital Account
The share capital account is a part of the shareholders' equity section of the company's balance sheet. It represents the total amount of capital invested by the shareholders.
When shares are issued at a premium, the premium amount is credited to the share capital account. Since the premium in this case is negative (-3), the share capital account will be credited with the premium amount.
Journal Entry
The journal entry to record the issuance of shares at a premium would be as follows:
Share Capital Account Dr. 10
Share Premium Account Cr. 3
Bank Account Cr. 7
Explanation:
- The Share Capital Account is debited with the face value of the shares (10) to represent the increase in share capital.
- The Share Premium Account is credited with the premium amount (-3) to represent the increase in share premium.
- The Bank Account is credited with the amount received (7) to represent the increase in cash.
Conclusion
In this case, the Share Capital Account will be credited with a premium of 3. This reflects the increase in share premium resulting from the issuance of shares at a premium. The journal entry for this transaction would be Share Capital Account Dr. 10, Share Premium Account Cr. 3, and Bank Account Cr. 7.
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On a share of 10 issued at a premium of 2 whole amount is called up and 7 is received .share capital account will be credited with?
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On a share of 10 issued at a premium of 2 whole amount is called up and 7 is received .share capital account will be credited with? 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 On a share of 10 issued at a premium of 2 whole amount is called up and 7 is received .share capital account will be credited with? covers all topics & solutions for Class 12 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for On a share of 10 issued at a premium of 2 whole amount is called up and 7 is received .share capital account will be credited with?.
On a share of 10 issued at a premium of 2 whole amount is called up and 7 is received .share capital account will be credited with? 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 On a share of 10 issued at a premium of 2 whole amount is called up and 7 is received .share capital account will be credited with? covers all topics & solutions for Class 12 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for On a share of 10 issued at a premium of 2 whole amount is called up and 7 is received .share capital account will be credited with?.
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