question archive On December 1, DOS Corporation issued 1,000 shares of its P10 par ordinary share capital and 2,000 shares of its P10 par preference share capital for a lump sum of P 40,000
On December 1, DOS Corporation issued 1,000 shares of its P10 par ordinary share capital and 2,000 shares of its P10 par preference share capital for a lump sum of P 40,000
Subject:AccountingPrice:2.87 Bought7
On December 1, DOS Corporation issued 1,000 shares of its P10 par ordinary share capital and 2,000 shares of its P10 par preference share capital for a lump sum of P 40,000. At this date, ordinary share is selling for P18 per share and the preference share for P13.50 per share. How much should the "Ordinary Share Capital” account be credited? (The entry to record the issuance of the shares serves as the solution for this problem)*
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Answer:
Journal Entry -
| Particulars | Amount ? | Amount? | |
| Cash A/c | Dr. | 40000 | |
| Discount on Issue of Preference share capital (13.5*2000 - 10*2000) | Dr. | 7000 | |
| To Preference Share capital A/c | 27000 | ||
| To Ordinary Share Capital A/c (1000*18) | 18000 | ||
| To Security Premium A/c ( Note 1) | 2000 |
Note 1 -
Total Amount = 40000
Less- Pref. share cap. = 20000
(2000*P10)
Balance for Ordinary Share cap. = 20000P
No. of share = 1000 @ 20P
Market value = P18
Security Premium = P20-18 = P2 i.e 2000P
