Question

Goodluck Ltd purchased machinery costing ₹ 10,00,000 from Fair Deals Ltd. The company paid the price by issue of Equity Shares of ₹ 10 each at a premium of 25%. Pass necessary Journal entries for the above transactions in the books of Goodluck Ltd.

Answer 1

$Number of shares issued: 10,00,000/(10+2.5)=80,000 shares$

Answer 2

Given:

Amount of machinery = 10,00,000

Price of shares = 10

Premium = 25%

To Find:

Journal entries

Solution:

Number of shares = 10,00,000 ( 10 + 2.5) ( 25% premium)

= 10,00,000/12.5

= 80,000

1. Machinery A/c Dr. 10,00,000

To Fair deals A/c 10,00,000

( Being machinery purchased)

2. Fair Deals Ltd.  A/c Dr. 10,00,000

To Equity Share capital 8,00,000

To Securities Premium 2,00,000

( Being 80,000 shares issued @ 10 at 25% premium)