Arjun Plastics Limited has to make a payment of Rs 1,00,000 to Rao Limited by issuing equity shares of Rs. 10 each at a premium of Rs. 2.50 per share. Find out the number of the equity Shares issued to Rao Limited.
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → 8,000 Equity Shares
When a payment is made by issuing shares at a premium, each share settles its issue price (face value + premium), so the number of shares = amount payable ÷ issue price.
Issue price = Rs. 10 + Rs. 2.50 = Rs. 12.50
Number of shares = Rs. 1,00,000 ÷ Rs. 12.50 = 8,000 shares
Equity Share Capital is credited with 8,000 × Rs. 10 = Rs. 80,000 and Securities Premium Reserve with 8,000 × Rs. 2.50 = Rs. 20,000.
Note: This question is from NCERT (2026-27). NTA sets numerical questions from NCERT too, so do not ignore NCERT while practising numericals. In the book’s solution the narration reads “Issue of 800 equity shares”; the entry itself credits Rs. 80,000 to Equity Share Capital, which at Rs. 10 a share is 8,000 shares.
NCERT (2026-27 edition):
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