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Issue of Shares at Premium

The excess pr...

Question

The excess price received over the par value of shares, should be credited to _______________.

A

Calls-in-advance account

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B

Share capital account

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C

Capital account

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D

Securities premium account

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Solution

The correct option is D Securities premium account
The premium amount as we discussed is credited to the Securities Premium Account. This accountis found under the heading of Reserves and Surplus on the cannot exceed the limit of the unissued share capital of the company for shares issued at a premium will differ slightly than those issued at par.

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Q. If shares are issued at premium, i.e. at an amount more than the nominal or par value of shares, the amount of premium is credited to a separate account called ________.

Q. S Ltd. issued 1,00,000 equity shares of Rs. 10 each at a premium of Rs. 2 per share to the public. Full amount payable at the time of application. Application was received for 1,20,000 shares. Excess application monies were refunded. Amount to be credited to share capital account should be____.

Q. At the time of forfeiture of shares which were originally issued at a discount, the accounting entry will be
I. A Debit Share capital account with the called-up value of shares forfeited.
II. A Credit Share forfeiture account with the amount received on forfeited shares.
III. A Credit Discount on issue of shares with the amount of discount allowed on forfeited shares,
IV. A Credit Calls-in-arrears with the amount due but not paid on forfeited shares.

Q. The premium on issue of shares must be credited to a separate account

called ________________.

Whenever securities premium is not received and the shares are forfeited, what will be the treatment in Calls in Arrear A/c?

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