On January 1, Hiro Corp. issues 1,000 no-par ordinary shares for €15 per share. The shares have a stated value of €5 per share. When Hiro prepares the journal entry to record the issuance of the shares which of the following will be recorded?
Select one:
a. Debit Share Premium—Ordinary €15,000.
b. Credit Share Premium—Ordinary €10,000
c. Debit Share Capital—Ordinary €5,000.
d. Credit Share Capital—Ordinary €15,000.
Ans .
Correct option | b |
Given: Number of Shares issued = 1,000
Issue Price of Share = € 15
Stated Value (Nominal Value ) of Share = € 5
Journal Entry in the books of Hiro Corp.
Date | Particular | Debit | Credit |
On issue of shares | |||
January,1 | Bank A/c. (1,000 × €15) | €15,000 | |
To Share Capital. (1,000× €5) |
€5,000 | ||
To Securities Premium (1,000 × €10) | €10,000 | ||
( Being issue of shares for Premium being recorded) |
As the Securites Premium is being credited with € 10,000 the correct Option is "b"
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