Question

Bhawna Ltd. was registered with a nominal capital of Rs.1,00,000 divided into shares of Rs.10 each, The Company purchased machinery for Rs, 27,000 from Singhal Bhatia. The Company issued fully paid equity shares of Rs.10 each in satisfaction of the claim. Give journal entries of the above transactions if Singhal Bhatia issued shares (a) at par (b) at 20% premium (c) at 10% discount.​

Answer 1

1 Machinery Account Dr. 27,000  

To Singhal Bhatia Account.  27,000

(Being the machine purchased)  

   

a Singhal Bhatia Account Dr. 27,000  

To Share Capital Account  27,000

(Being 2,700 shares of Rs.10 each issued at par to Singhal Bhatia against Machinery)  

   

b Singhal Bhatia Account Dr. 27,000  

To Share Capital Account  22,500

To Securities Premium Account  4,500

(Being 2,250 shares of Rs.10 each issued to vendor at a premium of Rs.2 per share)  

   

c Singhal Bhatia Account Dr. 27,000  

Discount on issue of Shares Account Dr. 3,000  

To Share Capital Account  30,000  

(Being 3,000 shares issued to vendor at a discount of Rs.1 per share)