Question

Bhawna Ltd. was registered with a nominal capital ₹1,00,000 divided into shares of ₹10 each. The company purchased assets for ₹27,000 from Bhatia-Singhal. The company issued fully paid equity shares of no each in satisfaction of the claim. Shares of ₹10,000 were issued at par to the promoters for their services.
Give journal entries of the above transactions if Bhatia-Singhal were issued shares at (i) par; and (ii) 20% premium.

Answer 1

Date	Particulars	L.F.	Debit (₹)	Credit (₹)
	Assets A/c     ...Dr.		27,000
	To Bhatia Singhal			27,000
	(Assets purchased from Bhatia Singhal)
(i)	Bhatia Singhal     ...Dr.		27,000
	To Equity Share Capital A/c			27,000
	(2,700 equity shares issued at 10 each)
(ii)	Bhatia Singhal     ...Dr.		27000
	To Equity Share Capital A/c			22500
	To Securities Premium Reserve A/c			4500
	(2,250 equity shares issued @12 each)
	Preliminary Expenses A/c     ...Dr.		10,000
	To Promoters A/c			10,000
	(Preliminary expenses incured by promoter)
	Promoters A/c     ...Dr.		10,000
	To Equity Share Capital A/c			10,000
	(1000 equity shares issued @10 each)
	Statement of Profit & Loss A/c     ...Dr.		10,000
	To Preliminary Expenses A/c			10,000
	(Preliminnary expenses written off)