Question

Illustration 1
Batliboi Co. Ltd., issued 50,000 equity shares of Rs. 10 each to the public on
condition that full amount of shares will be paid in a lump sum. All these shares
were taken up and paid by the public. Pass journal entries in the books of company
when
(a) Shares are issued at par (b) Shares are issued at a premium of 10% and
(c) Shares are issued at a discount of 10%.​

Answer 1

Explanation:

a. Amout will same

b. Amout will increase by 10%

c. Amout will decrease by 10%

Answer 2

Explanation:

a) When the Shares are issued at par

i) Bank A/c                                    Dr (Debit what comes in)   500000
      To Equity share application A/c  (Credit what goes out)                500000
(Being Equity share application money received)
ii) Equity share application A/c    Dr (Debit what comes in) 500000
             To Equity share capital A/c (Credit what goes out)                  500000
(Being Equity Share Application Amount get's transferred to Equity Share Capital)

b) When the Shares are issued at a premium of 10%

i) Bank A/c                                    Dr (Debit what comes in)   550000
      To Equity share application A/c  (Credit what goes out)            500000
      To Security Premium A/c                                                                  50000
(Being Equity share application money received)
ii) Equity share application A/c    Dr (Debit what comes in) 550000
             To Equity share capital A/c (Credit what goes out)              500000
           To Security Premium A/c (Credit what goes out)                     50000
(Being Equity Share Application Amount and security  get's transferred to Equity Share Capital)

c) Shares are issued at a discount of 10%

i) Bank A/c                                    Dr (Debit what comes in)   450000
      To Equity share application A/c  (Credit what goes out)            450000
(Being Equity share application money received and given on 10% Discount)
ii) Equity share application A/c    Dr (Debit what comes in) 450000
             To Equity share capital A/c (Credit what goes out)              450000
       
(Being Equity Share Application Amount get's transferred to Equity Share Capital)

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