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JAMB Principles of Accounts 1997 Question 43

Question 43

Company Accounts

Alabede (Nig.) Limited issued 50 000 ordinary shares of ₦1 each at a market value of ₦2.50 each. The share premium is

  1. A.₦125 000
  2. B.₦100 000
  3. C.₦75 000
  4. D.₦50 000.
Show the answer and explanation

Answer: C (₦75 000)

Explanation

Premium per share = 2.50 − 1.00 = 1.50. Total = 50 000 × 1.50 = ₦75 000.