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)

Books of Kumar Ltd
Date	Particulars			L.F.	Debit Amount (₹)	Credit Amount (₹)
	Sundry Assets A/c		Dr.		6,30,000
		To Bhanu Oil Ltd				6,30,000
	(Assets purchased from Bhanu Oil Ltd.)
(a)	Bhanu Oil Ltd		Dr.		6,30,000
		To Share Capital A/c				6,30,000
	(6,300 shares issued at par to Bhanu Ltd.)

Case (b)

Date	Particulars				L.F.	Debit Amount (₹)	Credit Amount (₹)
	Sundry Assets A/c			Dr.		6,30,000
		To Bhanu Oil Ltd					6,30,000
	(Assets purchased from Bhanu Oil Ltd.)
	Bhanu Oil Ltd			Dr.		6,30,000
			To Share Capital A/c				5,25,000
			To Securities Premium A/c				1,05,000
	(5,250 share are issued at 20% premium to Bhanu Ltd. in consideration of assets purchased)