- 1 Marks
Question
At 1 January 2011, the capital structure of Jumbo Plc was as follows:
Issued share capital, 10,000,000 ordinary shares of N1.00 each: N10,000,000
Share premium account: N500,000
On 1 September 2011, the company made a fresh issue of 500,000 shares at N1.30 each. Which of the following correctly presents the company’s share capital and share premium accounts as at 31 December 2011?
A. Share capital N10,000,000, Share premium N650,000
B. Share capital N10,500,000, Share premium N650,000
C. Share capital N10,650,000, Share premium N500,000
D. Share capital N10,150,000, Share premium N1,000,000
E. Share capital N10,000,000, Share premium N500,000
Answer
B
Explanation:
The fresh issue of 500,000 shares at N1.30 includes N0.30 as a premium, resulting in N150,000 added to the share premium account. The share capital increases by N500,000 (500,000 shares at N1.00), making the total share capital N10,500,000 and share premium N650,000. Therefore, the correct answer is option B.
- Tags: Financial Position, Share Capital, Share Premium
- Level: Level 1
- Topic: Accounting Concepts
- Series: MAY 2012
- Uploader: Theophilus