On 1 January Y Company Pty Ltd issued 100 000 shares for $2 each. Which of the following is the correct entry to record this transaction?
A) Debit bank $200 000; credit shareholder's equity $200 000
B) Debit bank $200 000; credit share capital $200 000
C) Debit bank $100 000; credit share capital $100 000
D) Debit shareholder's equity $200 000; credit bank $200 000

Question

Quizplus · Accepted Answer

The correct entry to record the issue of shares is to debit bank (or cash) for the amount received ($200,000) and credit share capital for the same amount. Share capital represents the amount of money that the company has received in exchange for the shares issued. Therefore, option B is the correct entry to record this transaction.

On 1 January Y Company Pty Ltd Issued 100 000