1) Is amount received through securities premium added to cash A/C ( asset of the firm)? 2) What is the journal entry for writting off share issue expenses with securities premium a/c

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Solution

Dear Student,

(a) Yes, anything for which cash/cheque is received, shall be added to Cash A/c. So yes, the amount of premium received shall be included in Cash and Cash Equivalents (to be shown under the Assets head of the Balance Sheet)

(b) For writing off share issue expenses from Securities Premium, the entry is to 'Debit the Securities Premium A/c' and 'Credit the Share Issue Expenses A/c'

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