Share Issuance at Premium

Steps:

• Calculate nominal value: 50,000 shares × $0.50 =$25,000.
• Calculate total proceeds: 50,000 shares × $0.60 =$30,000.
• Debit Bank account for cash received: $30,000.
• Credit Share Capital for par value: $25,000 (remainder to Share Premium).

Why A is correct:

• Matches IFRS/GAAP rule: Debit cash for full proceeds; credit Share Capital only for nominal amount ($25,000), with premium ($5,000) implied as separate credit.

Why the others are wrong:

• B: Incorrectly debits premium (should be credited) and credits capital for full proceeds.
• C: Reverses debits/credits—Share Capital is credited, not debited; Bank is debited, not credited.
• D: Credits Bank (should be debited) and overstates Share Capital at full proceeds.

Final answer: A