Question

Extract of Financial statements of Alexa Ltd. are produced below.

Balance Sheet (Extract)
Equity and Liabilities	Note no.	31-03-25	31-03-24
Shareholders funds		(₹)	(₹)
Equity Share capital	1	2,37,60,000	2,00,00,000
Reserves and Surplus	2	20,00,000	10,00,000

 

Note No. 1	Share Capital
Authorised Share Capital	31-03-25 (₹)	31-03-24 (₹)
Equity shares of Rs.10 each	-	-
Issued Capital	2,37,60,000	2,00,00,000
Subscribed capital (Fully Paid)	2,37,60,000	2,00,00,000

 

Note No. 2	Reserves and Surplus
	31-03-25 (₹)	31-03-24 (₹)
Securities Premium	20,00,000	10,00,000

During the year Alexa ltd. purchased business of Gloria Ltd. with assets of Rs. 50,00,000 and liabilities of Rs. 20,00,000. With regards to the following additional Information:

1. During the year 40,000 Equity Shares were issued at a premium of Rs. 4 per share for cash.
2. Besides this no shares were issued as sweat equity, bonus or as ESOP or in any other form.

Give journal entries for issue of shares for cash and consideration other than cash. Also, prepare Share Capital A/c and Securities Premium Account in the books of Alexa Ltd.

Answer 1

Journal entries
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
1.	Bank A/c    ...Dr.		5,60,000	-
	To Equity Share Application and Allotment A/c		-	5,60,000
	(Being application money including premium received)
2.	Equity share application and allotment A/c    ...Dr.		5,60,000	-
	To Equity Share Capital A/c		-	4,00,000
	To Securities Premium A/c		-	1,60,000
	(Being Shares issued at premium)
3.	Assets A/c    ...Dr.		50,00,000	-
	Goodwill A/c    ...Dr.		12,00,000	-
	To Liabilities A/c		-	20,00,000
	To Gloria Ltd. A/c		-	42,00,000
	(Being business taken over and goodwill recorded)
4.	Gloria Ltd. A/c    ...Dr.		42,00,000	-
	To Equity Share Capital A/c		-	33,60,000
	To Securities Premium A/c		-	8,40,000
	(Being Purchase consideration paid to Gloria Ltd.)

 

Dr.	Equity Share Capital A/c				Cr.
Date	Particulars	Amount (₹)	Date	Particulars	Amount (₹)
				By Balance b/d	2,00,00,000
				By Equity share application and allotment A/c	4,00,000
	To Balance c/d	2,37,60,000		By Gloria Ltd. A/c	33,60,000
		2,37,60,000			2,37,60,000

 

Dr.	Securities Premium A/c				Cr.
Date	Particulars	Amount (₹)	Date	Particulars	Amount (₹)
				By Balance b/d	10,00,000
				By Equity share application and allotment A/c	1,60,000
	To Balance c/d	20,00,000		By Gloria Ltd. A/c	8,40,000
		20,00,000			20,00,000