Accounting Multiple Choice Question – 11 August 2024

Alex plc issued 1,000,000 equity shares of 25p each at a price of £1.10 per share, all received in cash.

Which of the following general journals records this issue correctly?

Select ONE answer:

1. Debit Cash at bank £1,100,000 and Credit Share capital £250,000 plus Credit Share premium £850,000
2. Debit Share capital £250,000 plus Debit Share premium £850,000 and Credit Cash at bank £1,100,000
3. Debit Cash at bank £1,100,000 and Credit Share capital £1,100,000
4. Debit Cash at bank £1,100,000 and Credit Share capital £250,000 plus Credit Retained earnings £850,000

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 1

1. Correct- 1M shares £1.1 = £1.1M Cash split between 1M shares of £0.25p each for £250k, 1M share premium of 85p for £850k
2. Not correct
3. Not correct
4. Not correct

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