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Difficulty: MediumIssue of Shares at Par, Premium, and Discount

Zenith Logistics Plc offered for public subscription 50,00050,000 ordinary shares of ₦2.00\text{₦}2.00 each at a premium of 15%15\%. If all the shares were fully subscribed and paid for, what total amount (in ₦\text{₦}) will be credited to the Share Premium Account?

Answer: 15000 ₦

Answer

The total amount credited to the Share Premium Account is ₦15,000.
The premium per share is 15%15\% of ₦2.00\text{₦}2.00, which equals ₦0.30\text{₦}0.30. Multiplying this unit premium by the total 50,00050,000 shares issued yields ₦15,000\text{₦}15,000, which is credited to the Share Premium Account.

Step-by-Step Solution

1
Calculate the share premium per share
Premium per share = 0.15×₦2.00=₦0.300.15 \times \text{₦}2.00 = \text{₦}0.30
Share premium represents the excess amount over the nominal (par) value of each share issued.
2
Multiply the premium per share by the number of shares issued
Total Share Premium = 50,000×₦0.30=₦15,00050,000 \times \text{₦}0.30 = \text{₦}15,000
The total amount credited to the Share Premium Account is the unit premium multiplied by the total number of subscribed shares.

Key Concept

Accounting calculation for share premium upon issue of shares
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Topics

Issue of Shares at Par, Premium, and Discount

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