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A limited liability company issued 50,000 ordinary shares of 25c each at a premium of 50c per share. The cash received was correctly recorded but the full amount was credited to the ordinary share capital account.
Which one of the following journal entries is needed to correct this error?
sir here the answer is
share capital account DR 25000
SHARE PREMIUM ACCOUNT CR 25000
Sir why are they multiplying by 50/100..the lowest par value is 25/100 so 50,000 should be multiplied by that..what is the logic being used here?
what does it mean that it is the transfer of premium to share premium account?The cash received is 50,000 x $0.75 = $37,500.
Of this, 50,000 x $0.25 (the par value) should be credited to the share capital account, and 50,000 x $0.50 (the premium) should be credited to the share premium account.
This is all explained in my free lectures on limited companies. The lectures are a complete free course for Paper FA and cover everything needed to be able to pass the exam well.
At 30 June 20X2 a company had $1m 8% loan notes in issue, interest being paid half-yearly on 30 June and 31 December.
On 30 September 20X2 the company redeemed $250,000 of these loan notes at par, paying interest due to that date.
On 1 April 20X3 the company issued $500,000 7% loan notes, interest payable half-yearly on 31 March and 30 September.
What figure should appear in the company’s statement of profit or loss for interest payable in the year ended 30 June 20X3?Why are you attempting a question for which you do not have an answer? You should be using a Revision Kit from one of the ACCA Approved Publishers – they have answers and workings 🙂
From 1 July X2 to 30 September X2 they had $1M 8% loan notes, and so the interest for that period is 3/12 x 8% x $1M = $20,000
From 1 October X2 to 30 June X3 they had only $750,000 8% loan notes, and so the interest for that period is 9/12 x 8% x $750,000 = $45,000
From 1 April X3 to 30 June X3 they also had $500,000 7% loan notes, and so the interest on them was 3/12 x 7% x $500,000 = $8,750.
So the total interest expense for the year is the total of the three amounts.
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