Question

Chavi Ltd. purchased machinery from Neo Ltd. It was agreed that the purchase consideration will be paid by issuing 10,000 equity shares of ₹ 10 each at a premium of 10% and a bank draft of ₹ 50,000.

Pass the necessary journal entries in the books of Chavi Ltd. for the above transactions.

Answer 1

In the books of Chavi Ltd.
Journal Entries
Date	Particulars	L.F.	Dr. Amount	Cr. Amount
1	Machinery A/c   ...Dr.		1,60,000
	To Neo Ltd.			1,60,000
	(Being machinery purchased)
2	Neo Ltd. A/c   ...Dr.		1,60,000
	To Bank A/c			50,000
	To Share Capital A/c			1,00,000
	To Securities Premium A/c			10,000
	(Being purchase consideration paid)