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Madhav Ltd. Issued Fully Paid Equity Shares of Rs 80 Each at a Discount of Rs 5 per Share for the Purchase of a Running Business from Gupta Bros. for a Sum Of Rs 15,00,000. the Assets and Liabilities Consisted of the Following : Plant Rs 5,00,000; Trucks Rs 7,00,000; Stock Rs 3,00,000; Machinery Rs 6,00,000 and Sundry Creditors Rs 5,00,000. You Are Required to Pass Necessary Journal Entries for the Above Transactions in the Books of Madhav Ltd. - CBSE (Arts) Class 12 - Accountancy

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Question

Madhav Ltd. issued fully paid equity shares of Rs 80 each at a discount of Rs 5 per share for the purchase of a running business from Gupta Bros. for a sum of  Rs 15,00,000. The assets and liabilities consisted of the following : Plant Rs 5,00,000; Trucks Rs 7,00,000; Stock Rs 3,00,000; Machinery Rs 6,00,000 and Sundry Creditors Rs 5,00,000. You are required to pass necessary journal entries for the above transactions in the books of Madhav Ltd.

Solution

Journal
Date Particulars L.F.

Dr.

Rs

Cr.

Rs

 

Plant A/c              Dr.

Trucks A/c           Dr.

Stock A/c            Dr.

Machinery A/c       Dr.

       To Capital Reserve A/c (Balancing Figure)

       To Sundry Creditors A/c

       To Gupta Bros

(Being Assets and Liabilities purchased from Gupta Bros)

 

5,00,000

7,00,000

3,00,000

6,00,000

 

 

 

 

 

 

 

 

1,00,000

5,00,000

15,00,000

 

 

Gupta Bros A/c     Dr.

Discount on Issue of Shares A/c (20,000 Shares × Rs 5)     Dr.

      To Equity share capital A/c (20,000 shares × Rs 80)

(Being 20,000 equity shares of Rs 80 each issue at discount of Rs 5 to Gupta Bros)

 

15,00,000

1,00,000

 

 

 

 

16,00,000

 

Working Note

Calculation of Number of Equity shares issued

Number of Equity Shares = `"Purchase Consideration"/"Issue Price(Face Value - Discount)"`

`= 1500000/(80 - 5)`

= 20,000 Equity Shares

  Is there an error in this question or solution?
Solution Madhav Ltd. Issued Fully Paid Equity Shares of Rs 80 Each at a Discount of Rs 5 per Share for the Purchase of a Running Business from Gupta Bros. for a Sum Of Rs 15,00,000. the Assets and Liabilities Consisted of the Following : Plant Rs 5,00,000; Trucks Rs 7,00,000; Stock Rs 3,00,000; Machinery Rs 6,00,000 and Sundry Creditors Rs 5,00,000. You Are Required to Pass Necessary Journal Entries for the Above Transactions in the Books of Madhav Ltd. Concept: Share Capital - Issue and Allotment of Equity Shares.
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