Accounting for Shares

General Accounting Principles

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Company purchased a Building for Rs.12,00,000 out of which Rs.2,00,000 were paid in cash. Balance amount was paid by issue of equity shares of RS.10 each at 25% premium. How many shares will be issued by the Company :

1,00,000 Shares

80,000 Shares

1,20,000 Shares

96,000 Shares

Explanation:

BUILDING PURCHASE= RS.12,00,000 (AT RS. 10 PER SHARE+ 25% PREMIUM=12.5 PER SHARE)

CASH=RS.2,00,000

12,00,000-2,00,000=10,00,000

NO. OF SHARES ISSUED= PURCHSE COSIDERATION/ISSUED PRICE,00 OF A SHARE

=RS.10,00,000/12.5=80,000 SHARES (ANSWER)

By: Abhipedia

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