10. Bhanu Ltd purchased assets of Rs 6,30,000 from Aero oil Ltd. Bhanu Ltd issued equity shares of
Rs 100 each fully paid in consideration. What journal entries will be made if the shares are
issued at
1. At par
2. At premium of 20%
3. At a discount of 10%
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Answer:
When issued at Par :
Asset A/C Dr 6,30,000
To Equity Share Capital A/C 6,30,000
When issued at 20% premium
Asset A/C Dr 6,30,000
To Equity share Capital A/C 5,25,000
To Securities Premium A/C 1,05,000
When issued at 10% discount
Asset A/C Dr 6,30,000
Discount on issue of Shares A/C 70,000
To Equity Share Capital A/C 7,00,000
Explanation:
No. of shares to be issued : Amount Payable ÷ Issue Price
Case -a : issued at Par
6,30,000 ÷ 100 = 6,300
Case -b : Issued at 20% premium
6,30,000 ÷ 120 = 5,250
Cash -c : Issued at 10% discount
6,30,000 ÷ 90 = 7,000
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