Debit retained earnings, credit share capital, credit share premium account is the correct double entry to record an issue of bonus shares.

Question

Quizplus · Accepted Answer

The correct double entry to record an issue of bonus shares is to debit retained earnings and credit share capital. There is no credit to the share premium account in this transaction because bonus shares are issued by converting retained earnings or other equity reserves into share capital, not by receiving new funds or premiums.

Debit Retained Earnings, Credit Share Capital, Credit Share Premium Account