Answer to Question #229534 in Financial Math for Millicent

Question

Which one of the following journal entries is correct when payment for share issue expenses are made?

Select one:

a. Debit: Share issue expense; Credit: Bank

b. Debit: Trade payables; Credit: Bank

c. Debit: Bank; Credit: Trade payables

d. Debit: Bank; Credit: Share- issue expense

Answer 1

Solution:

There are three golden rules in accounting for recording the transaction :

1. Debit what comes in , Credit what goes out.
2. Debit the receiver , Credit the giver.
3. Debit all expenses & Losses , Credit all incomes & gains.

Journal Entry 

Particular  Debit  Credit

Share issue expense a/c                  Dr xxx   

To Bank a/c   xxx

(Being payment made for share issue expenses )  

So, Correct option is (a) Debit: Share issue expense; Credit: Bank