Accounting Multiple Choice Question – 7 August 2024

Alex plc made an issue of shares for cash of 1,000,000 * 50p shares at a premium of 30p per share.

Which of the following general journals correctly records the issue of new shares?

Select ONE answer:

1. Debit Share capital £500,000, Debit Share premium £300,000, Credit Cash at bank £800,000
2. Debit Cash at bank £800,000, Credit Share capital £500,000, Credit Share premium £300,000
3. Debit Cash at bank £1,300,000, Credit Share capital £1,000,000, Credit Share premium £300,000
4. Debit Share capital £1,000,000, Debit Share premium £300,000, Credit Cash at bank £1,300,000

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 2

1. Notcorrect
2. Correct  –> Share capital will be credited with the nominal value of the shares (1m × 50p) – the balance goes to share premium (1m × 30p).
3. Not correct
4. Not correct

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