Question

Kumar Ltd. purchased assets of Rs. 6,30,000 from Bhanu Oil Ltd. Kumar Ltd. issued equity share of Rs. 100 each fully paid in consideration. What journal entries will be made, if the shares are issued, (a) at par, and (b) at premium of 20%.

Answer 1

Case (a)

Journal Entries
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
1.	Sundry Assets A/c   ...Dr.		6,30,000	-
	To Bhanu Oil Ltd’s A/c		-	6,30,000
	(Assets purchased from Bhanu Oil Ltd)
2.	Bhanu Oil Ltd’s A/c   ...Dr.		6,30,000	-
	To Share Capital A/c		-	6,30,000
	(Shares issued to Bhanu Oil Ltd. at par)

No. of shares issued at par = `"Amount payable"/"Issue Price"`

= `(6,30,000)/100`

= 6,300 shares

Case (b)

Journal Entries
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
1.	Sundry Assets A/c   ...Dr.		6,30,000	-
	To Bhanu Oil Ltd’s A/c		-	6,30,000
	(Assets purchased from Bhanu Oil Ltd)
2.	Bhanu Oil Ltd’s A/c   ...Dr.		6,30,000	-
	To share capital A/c		-	5,25,000
	To securities premium A/c		-	1,05,000
	(5,250 Shares issued to Bhanu Oil Ltd. at a premium of 20% for assets purchased)

When shares issued at premium of 20%, i.e., at Rs. 120 (100 + 20)

Number of shares to be issued = `"Amount payable"/"Issue Price"`

= `(6,30,000)/120`

= 5,250 shares