ACCA FA · Chapter 9 · Question 1 of 10
A company issued 200,000 ordinary shares with a nominal value of $0.50 each at a price of $1.80 per share. What amount should be credited to the share premium account?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) $260,000
Explanation
Share capital is credited with the nominal value: 200,000 x $0.50 = $100,000. The premium is the excess of the issue price over nominal value: 200,000 x ($1.80 - $0.50) = $260,000. Total cash received is $360,000. Assuming a $1 nominal value gives $160,000.
More Capital structure and finance costs MCQs
- Q3Which of the following statements about a bonus issue of shares is correct?
- Q4On 1 April 20X5, a company issued $250,000 of 8% loan notes. Interest is paid every six months on 30 September and 31 March. What is the…
- Q5Where are dividends paid to ordinary shareholders presented in a company's financial statements?
- Q6A company has issued redeemable preference shares that must be redeemed for cash on a fixed date. How should these be classified, and how…
- Q7A company has 1,200,000 ordinary shares of $0.25 each in issue. It pays a dividend of 5 cents per share. What is the total dividend payment?