Question

Spring ltd. invited applications for issuing 60000 equity shares at rs 10 each at a premium of rs 2 per share the amount was payable as follows - on applications rs. 3 per share

Answer 1

Given: Inviting applications of 60000 shares for Rs. 10 each (including Rs. 2 premium per share) and issuing applications for Rs. 3 per share

To Find: Pass the journal entry

Solution:

                  Particulars                                                  Amount             Amount

    Bank A/c                   Dr.    ( 60000 * 3)                   180000

                   To, share application A/C                                                    180000

[ being application money received on 60000 shares]

   share application A/C       Dr. ( 60000 * 3)                180000

              To, share capital A/C ( 60000* 1)                                              60000

              To, security premium reserve A/C (60000*2)                         120000

[ being application money transferred to share capital A/C and security premium reserve A/C]

Note: In a simple term, a journal entry is recording the transactions in Double Entry form that is recording in two aspects  -   Debit or credit.