10,000 equity shares of Rs. 10 each were issued to public at a premium of Rs. 2 per share. Application was received for 12,000 shares. Amount of securities premium account will be_____.

Rs. 24,000

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Rs. 20,000

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Rs. 4,000

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Rs. 1,600

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Solution

The correct option is B Rs. 20,000
In this case, nominal value of shares issued becomes Rs. 1,00,000 but selling price is Rs 1,20,000 (Rs 2 is premium). Therefore, share account will have Rs 1,00,000 and Rs 20,000 will go to the securities premium account.

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