8. Jindal and Company purchased a machine from High Life Machine Limited for Rs.3,80,000. As per purchase agreement, Rs. 20,000 were paid in cash and balance by issue of shares of Rs.100 each. What will be the entries passed if the shares are issued:
(a) At par
(b) At 10% discount
(c) At 20% premium
Answers
Answer:
Required Journal Entries :
• Machine ac Dr. 3,80,000
To Bank ac 20,000
To High Life machine ac 3,60,000
( Machine purchased and ₹20,000 paid in cash and the balance paid by issue of share )
a) When shares are issued at par
High Life machine Limited Dr. 3,60,000
To share capital ac. 3,60,000
( 3,600 shares are ₹100 each )
b) When shares are issued at discount
High Life machine ac Dr. 360,000
Discount ac Dr. 40,000
To share capital. ac. 4,00,000
( 4000 shares are ₹100 each )
c) When shares are issued at premium
High Life machine ac Dr. 3,60,000
To Share Capital ac. 3,00,000
To Securities premium ac. 60,000
( 3,000 shares issued at ₹120 per share )
Working Note :
No.of Shares will be calculated as follows ;
a) When shares issued at par
= ₹ 3,60,000 / ₹ 100
= 3,600 shares
b) When shares issued at discount
= ₹ 3,60,00 / ₹ 90
= 9000 shares
c) When shares issued at premium
= ₹ 3,60,000 / ₹ 120
= 3000 shares