Day: September 17, 2024

Accounting Multiple Choice Question – 17 September 2024

The home of multiple choice questions for all your KS3, KS4 and KS5 Business Studies, Economics and Accounting requirements.

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Alex Ltd issues 250,000 equity shares with a nominal value of £2 each at a price of £3.55 each for cash.

Which of the following sets of entries would be made to record this transaction?

Select ONE answer:

  1. Credit Bank £887,500, Debit Share capital £500,000, Debit Share premium £387,500
  2. Debit Bank £887,500, Credit Share capital £250,000, Credit Share premium £637,500
  3. Debit Bank £887,500, Credit Share capital £500,000, Credit Share premium £387,500
  4. Credit Bank £887,500, Debit Share capital £250,000, Debit Share premium £637,500

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 3

  1. Not correct
  2. Not correct
  3. Correct == > Cash raised is 250,000 x £3.55 = £887,500, which is debited to cash at bank. The credit to share capital is 250,000 x £2 = £500,000, while the credit share premium is250,000 x £1.55 = £387,500
  4. Not correct

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