Z ltd. Issued 1,00000 Equity Shares of Rs 10 each at a premium of 20%, payable as follows-- Rs 3 on application, Rs 6 on allotment and balance on first and final call. The security Premium Reserve Account will be -
Answer & explanation
Correct answer: option 2
Total Equity Shares Issued = 100000
Face Value per Share = Rs 10
Premium per Share = 20% of Rs 10 = Rs 2
Total Premium Collected = Total Equity Shares * Premium per Share
= 100000 * Rs 2
= Rs 200000
The Security Premium Reserve Account is credited with the premium collected from issuing shares at a premium.