Multiple choice

Z Limited made the following issue of shares : (i) To a vender who supplied machinery costing Rs.4, 40,000, 4000 Equity shares of Rs.100 each at a premium of 10%, (ii) 1000, 10% Preference shares of Rs.500 each at a premium of 5%, and (iii) 2000 Equity shares of Rs. 100 each at discount of 5%. (iv) 500 Equity shares of Rs. 100 each at par to the promoters.

Which one of the following entries about issue of shares is correctly recorded?

  1. Entry for point (i): Vender's Personal A/c Rs. 4, 40,000 To Equity Share Capital A/c Rs. 4, 40,000

  2. Entry for point (ii): Bank A/c 5, 25,000 To 10% Preference Share Capital A/c Rs. 5, 25,000

  3. Entry for point (iii): Bank A/c 1,90,000 To Equity Share Capital A/c Rs. 1,90,000

  4. Goodwill A/c Rs. 50,000 To Equity Share Capital A/c Rs. 50,000
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

When shares issued to the promoters then the amount of shares issued is recorded through Goodwill A/c.

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