Q.XYZ Ltd. issued 20,000 equity shares of ₹10 each at a premium of ₹2 per share, payable as ₹3 on application, ₹5 (including premium) on allotment, and ₹4 on first and final call. All the shares were subscribed and all money was duly received. Pass journal entries in the books of XYZ Ltd.

Amount received above par value = premium → credited to Securities Premium account. Option (b).

A share has a face/par value (say ₹10). If a company issues it at ₹12, the ₹10 is capital and the extra ₹2 is a premium on issue.

• Share Capital account is credited only with the nominal (face) value called up.
• The excess over face value is a capital receipt and must be credited to the Securities Premium account (a statutory reserve with restricted uses under the Companies Act — e.g. issuing bonus shares, writing off preliminary expenses).
• Forfeited Shares account records amounts already paid on shares that are cancelled, and Calls-in-Advance records money received for calls not yet due — neither fits here.

Entry idea: Bank Dr (amount received); to Share Capital (face value) and to Securities Premium (excess).

Shares issued for the purchase of assets are credited to the Share Capital Account.

When a company buys assets and pays the vendor by issuing shares (Company Accounts, TN HSC Commerce), the entries are:

1. On purchase: Sundry Assets A/c Dr — To Vendor's A/c
2. On issue of shares to vendor: Vendor's A/c Dr — To Share Capital A/c

The second entry settles the vendor's claim and creates share capital, so the amount is credited to the Share Capital Account.

Shares arrange Finance for a business.

Issuing shares (equity or preference) is one of the principal ways a public company raises long-term capital — investors buy shares and the company receives the sale proceeds as finance to fund its operations and expansion, in exchange for ownership rights/dividends. Shares do not directly supply a business with 'goods' (that would be done through purchases/trade credit).

The excess of issue price over face value is share premium, credited to the Securities Premium account.

In the Tamil Nadu HSC Class-12 Accountancy syllabus (Company Accounts), a share has a fixed par/face value. A company may issue it at par, at a premium, or (rarely) at a discount.

• If shares are issued at a premium, the price charged is higher than the face value. Only the face value is credited to Share Capital A/c; the extra amount (the premium) is credited to the Securities Premium A/c.

• Securities premium is a capital reserve, governed by the Companies Act, and can be used only for specified purposes (issuing bonus shares, writing off preliminary expenses, providing premium on redemption, buy-back, etc.).

• Forfeited Shares A/c holds amounts already received on shares later forfeited; Calls-in-advance A/c holds amounts paid before a call is due — neither fits "amount over and above par value".

The excess of issue price over par (face) value is share premium and is credited to the Securities Premium Account, so the answer is option (b).

When a company issues shares, the price collected can be split into two parts:

• The par (face) value, which goes to the Share Capital Account.
• Any amount collected over and above the par value, which is the premium.

Under the Companies Act, the premium collected cannot be treated as ordinary revenue or as share capital — it is a capital receipt kept in a distinct Securities Premium Account, whose use is restricted by law (e.g. issuing bonus shares, writing off preliminary expenses or discount on issue, premium on redemption).

Why the other options are wrong:

• (a) Share capital account records only the par value, not the excess.
• (c) Forfeited shares account arises only when shares are forfeited for non-payment of calls.
• (d) Calls in advance account records money received before a call is due, not a premium.

This is a standard Company Accounts idea in the Tamil Nadu HSC (Class 12) Accountancy syllabus.

On issue of shares for the purchase of assets, Share Capital Account is credited — option (d).

When a company buys assets and pays by issuing shares to the vendor, two stages arise:

1. On purchase: Sundry Assets A/c Dr, To Vendor's A/c.
2. On issue of shares to settle the vendor: Vendor's A/c Dr, To Share Capital A/c (and Securities Premium, if issued at a premium).

The final settlement credits the Share Capital Account, because the company's capital increases by the shares allotted. (No cash flows, so Bank is not involved; the vendor account is debited, not credited, at settlement.)

Correct matching is (1)-(iii), (2)-(ii), (3)-(iv), (4)-(i) — option (d).

Matching each share-issue term to its meaning:

So (1)-(iii), (2)-(ii), (3)-(iv), (4)-(i).