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JAMB Principles of Accounts 2014 Question 48

Question 48

Company Accounts

Oil and Buns issued to the public 1,300,000 ordinary shares of 75k at a price of ₦1.50k. Application and allotment were received for 900,000 shares at 25k each.
The book value of issued share capital is

  1. A.₦675,000.
  2. B.₦975,000.
  3. C.₦1,350,000.
  4. D.₦1,950,000.
Show the answer and explanation

Answer: B (₦975,000.)

Explanation

Issued share capital is recorded at nominal value: 1 300 000 × 75k = ₦975 000. The 75k premium on each share goes to share premium.