Multiple choice

A company issued 15,000, 9% preference shares of Rs. 100 each at 5% discount and 2,00,000 equity shares of Rs. 10 each at 10% premium. Full amount was received from the applicants in one instalment. The net balance of securities premium account will be

  1. Rs. 75,000

  2. Rs. 1,25,000

  3. Rs. 2,00,000

  4. cannot be determined
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Equity shares issued at 10% premium: 2,00,000 × Rs. 1 = Rs. 2,00,000 credited to Securities Premium. Preference shares at 5% discount involve no premium - discount is a loss, not gain. Net balance = Rs. 2,00,000.

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