question archive A Company decided to incorporate the statutory reserves in the amount of 800 lei into the share capital by issuing new shares (one new for five old)
A Company decided to incorporate the statutory reserves in the amount of 800 lei into the share capital by issuing new shares (one new for five old)
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A Company decided to incorporate the statutory reserves in the amount of 800 lei into the share capital by issuing new shares (one new for five old). Choose the correct accounting formula to register the increase in share capital.
Treasury stock = Share capital 800
Statutory reserves = Treasury stock 800
Statutory reserves = Share capital 800
Share capital = Statutory reserves 800
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Answer :
Correct Answer is option C
Statutory reserves = Share capital 800
Explaination :
When new shares will be issued from the Statutory reserves , Statutory reserve will decrease and Share Capital will increase. In this case below mentioned entry will be passed.
| Particular | Dr. | Cr. |
| Statutory reserves | 800 | |
| Share capital | 800 |
