Question

A company made a rights issue of 200,000 shares at ₹10 per share with a premium of 20%. What should be the journal entry for this transaction?

Q: Answer-A company made a rights issue of 200,000 shares at ₹10 per share with a premium of 20%. What s...

To Equity Share Capital Ac 20 lakhs To Securities Premium Ac 4 lakhs The company issued 200,000 shares at 10 each, with a 20 premium. This means the issue price per share is 12 10 face value 2 premium. Total amount received 200,000 shares 12 24 lakhs. The journal entry would credit 20 lakhs to Equity Share Capital 200,000 shares 10 face value and 4 lakhs to the Securities Premium Account 200,000 shares 2 premium.

A Bank A/c Dr ₹24 lakhs To Equity Share Capital A/c ₹24 lakhs

B Bank A/c Dr ₹24 lakhs To Equity Share Capital A/c ₹16 lakhs To Securities Premium A/c ₹8 lakhs

C Bank A/c Dr ₹24 lakhs To Equity Share Capital A/c ₹20 lakhs To Securities Premium A/c ₹4 lakhs

D Bank A/c Dr ₹20 lakhs To Equity Share Capital A/c ₹16 lakhs To Securities Premium A/c ₹4 lakhs

E Bank A/c Dr ₹20 lakhs Securities Premium Dr A/c ₹4 lakhs To Equity Share Capital A/c ₹24 lakhs

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A company made a rights issue of 200,000 shares at ₹10 per share with a premium of 20%. What should be the journal entry for this transaction?

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