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Question
Goodluck Ltd. purchased machinery costing Rs 10,00,000 from Fair Deals Ltd. The company paid the price by issue of Equity shares of Rs 10 each at a premium of 25%. Pass necessary journal entries for the above transaction in the books of Goodluck Ltd.
Solution
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Books of Goodluck Ltd. Journal |
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Date |
Particulars |
L.F. |
Debit Amount Rs |
Credit Amount Rs |
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Machinery A/c |
Dr. |
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10,00,000 |
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To Fair Deals Ltd. |
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10,00,000 |
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(Machinery purchased from Fair Deals Ltd.) |
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Fair Deals Ltd. |
Dr. |
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10,00,000 |
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To Equity Share Capital A/c |
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8,00,000 |
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To Securities Premium A/c |
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2,00,000 |
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(80,000 equity shares of Rs 10 each issued at a premium of 25% to Fair Deals Ltd.) |
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Notes
`"Number of shaeres issued"= "Purchase Price"/"(Face-Value+Premium)Per Share"`
= `(10,00,000)/(10+2.5)=80,000 "Shares"`
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