Q.Pavitra Co. Ltd. issued ₹ 20,00,000 capital divided into equity shares of ₹ 100 each at a premium of ₹ 20 per share.
Amount payable as:
₹ 20 on Application
₹ 40 on Allotment (including ₹ 10 premium)
₹ 60 on First and Final call (including ₹ 10 premium)
The company received applications for all shares. All the money due on allotment and first and final call was duly received.
Pass Journal Entries in the books of Pavitra Co. Ltd.

Face value ₹100 and issue price ₹110 means the shares are issued at a premium of ₹10 per share.

Shares can be issued in three ways relative to their face (nominal) value:

• At par — issue price = face value.
• At premium — issue price is more than face value; the excess is the premium.
• At discount — issue price is less than face value. …

A company may issue shares at par, at premium or at discount. 'At loan' is not a mode of share issue, so it is the odd one out.

Modes of issue of shares by their price

Shares may be issued at par, at a premium or (subject to legal conditions) at a discount, so the statement is false.

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