What is the double entry for issuing new shares?

What is the double entry for issuing new shares?

• A. Dr Bank (no. of shares * issued value); Cr Share Capital (no. of shares * nominal value); Cr Share Premium (no. of shares * share premium)
• B. Dr Bank; Cr Share Capital; Cr Retained Earnings
• C. Dr Share Premium; Cr Bank; Cr Share Capital
• D. Dr Bank; Cr Share Premium; Cr Share Capital

Answer: (A)

When you issue new shares, you bring in cash and increase equity in two parts: the nominal value goes to Share Capital, and any amount above nominal goes to Share Premium. The bookkeeping reflects this by debiting the Bank (cash received) for the total proceeds and crediting two equity accounts for the split between par value and premium. So the standard entry is: Dr Bank with the total cash received (number of shares × issue price); Cr Share Capital for the nominal value (number of shares × nominal value); Cr Share Premium for the excess over nominal value (number of shares × (issue price − nominal value)). If there’s no premium, you would credit only Share Capital. For example, issuing 10,000 shares with a nominal value of 1.00 at 1.50 each results in Dr Bank 15,000; Cr Share Capital 10,000; Cr Share Premium 5,000.

When you issue new shares, you bring in cash and increase equity in two parts: the nominal value goes to Share Capital, and any amount above nominal goes to Share Premium. The bookkeeping reflects this by debiting the Bank (cash received) for the total proceeds and crediting two equity accounts for the split between par value and premium.

So the standard entry is: Dr Bank with the total cash received (number of shares × issue price); Cr Share Capital for the nominal value (number of shares × nominal value); Cr Share Premium for the excess over nominal value (number of shares × (issue price − nominal value)).

If there’s no premium, you would credit only Share Capital. For example, issuing 10,000 shares with a nominal value of 1.00 at 1.50 each results in Dr Bank 15,000; Cr Share Capital 10,000; Cr Share Premium 5,000.