Issue of Shares Problem Solving

The video tutorial covers the process of issuing shares, including the calculation of premiums and the handling of non-payment scenarios. It provides detailed instructions on journal entries for share transactions, including application, allotment, and calls. The tutorial also explains the forfeiture of shares and how to present these transactions in the balance sheet. Tips for ensuring accurate journal entries are provided throughout.

What is the face value of the shares issued by John Limited?

• 110

• 80

• 100

• 90

Why is it important to know where the premium is included in the share issue process?

• To calculate the total number of shares

• To determine the correct journal entries

• To decide the share price

• To know the company's profit

What is the rule for debiting the bank account in journal entries?

• Credit what comes in

• Debit what comes in

• Debit what goes out

• Credit what goes out

In the context of share allotment, what does the premium represent?

• The face value of the shares

• A discount given to shareholders

• An additional charge on the face value

• The total value of the shares

What happens when a shareholder fails to pay the allotment and calls?

• The shareholder is given a discount

• The shares may be forfeited

• The company issues more shares

• The shares are transferred to another shareholder

How is the share capital affected during the forfeiture of shares?

• It is increased by the face value of forfeited shares

• It is reduced by the face value of forfeited shares

• It remains unchanged

• It is increased by the premium value

Where is the securities premium presented in the balance sheet?

• Under current liabilities

• Under fixed assets

• Under reserves and surplus

• Under current assets