Shanker Ltd purchased machinery for Rs 1,98,000 from Parvati Ltd. The payment of Parvati
Ltd was made by issue of equity shares of Rs 100 each.
Pass necessary journal entries in the books of Shanker Ltd for the above transactions when
shares were issued at 10% premium
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Answer:
(a) No of shares =
IssuePrice
PurchasePrice
=
90(100−10)
7,20,000
=8,000 shares
(b) Capital Reserve =Net Assets - Purchase consideration
Rs.2.60,000−Rs.2,50,000.
Rs..10,000.
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