Question

Z Ltd purchased machinery from K Ltd. Z Ltd paid k Ltd as follows, 1.by issuing 5000 equity shares of 10 each at a premium of 30%.2.by issuing 1000,8%debentures of 100 each at a discount of 10%. 3.balance by giving a promissory note of 48000 payable after 2 months.pass journal entries for purchase and payment to K Ltd

Answer 1

machinery a/c. Dr. 203000
discount on issue of debenture a/c Dr.10000
to equity capital. 50000
to securities premium. 15000
to. debenture. 100000
to. notes payable. 48000


(securities premium=5000×10×30%=15000
discount on issue=1000×100×10%=10000)