Under English law, a company issues 10,000 £1 ordinary shares at a price of £3.50 each, fully paid in cash. What amount is credited to the share premium account?

Correct answer: C) £25,000

Explanation

Share capital is credited with the nominal value: 10,000 x £1 = £10,000. The excess of issue price over nominal value goes to share premium: 10,000 x (£3.50 - £1.00) = 10,000 x £2.50 = £25,000. Total cash received is £35,000 (£10,000 + £25,000). The share premium account is subject to capital maintenance rules.