Question

Ahluwalia Ltd. issued 1,000 equity shares of Rs. 100 each as fully paid-up in consideration of the purchase of plant and machinery worth Rs. 1,00,000. What entry will be recorded in the company’s journal?

Answer 1

Journal Entries in the Books of Ahluwalia Ltd.
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
1.	Plant and Machinery A/c   ...Dr.		1,00,000	-
	To Vendor’s A/c		-	1,00,000
	(Being plant and machinery purchased from the vendor)
2.	Vendor’s A/c ... Dr.		1,00,000	-
	To Equity Share Capital A/c		-	1,00,000
	(Being 1,00,000 equity shares of Rs. 100 each issued to the vendor)

Working Note:

Number of Shares to be Issued = `"Purchase Consideration"/"Issue Price Per Share"`

Number of Shares = `(1,00,000)/100`

= 1,000 Equity Shares