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Capital structure and finance costs

Accounting for share issues

2.1 Issue at market price

In the case of an issue at market price, the company must always receive at least the
nominal value per share. Any receipt in excess of nominal value when the shares are
first issued is classified as share premium.

The accounting entries to record the share issue would be:

Debit Bank account (issue price × no. of shares)

Credit Share capital account (nominal value × no. of shares)

Credit Share premium account (premium raised × no. of shares)

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