Sona Ltd. purchased machinery costing ₹ 17,00,000 from Mona Ltd. Sona Ltd. paid 20% of the amount by cheque and for the balance amount issued Equity Shares of ₹ 100 each at a premium of 25% . Pass necessary Journal entries for the above transactions in the books of Sona Ltd .Show your working notes clearly.

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Solution

Journal
In the Books of Sona Ltd.

Date

Particulars

L.F.

Debit

Amount

(Rs)

Credit

Amount

(Rs)

Machinery A/c

Dr.

17,00,000

To Mona Ltd.

17,00,000

(Machinery purchased on credit from Sona Ltd.)

Mona Ltd.

Dr.

3,40,000

To Bank A/c

3,40,000

(20% amount paid through cheque)

Mona Ltd. (17,00,000 – 3,40,000)

Dr.

13,60,000

To Equity Share Capital*

10,88,000

To Securities Premium A/c*

2,72,000

(Issued 10,880 shares of Rs 100 each to Mona Ltd. at 25% Premium)

Working Notes: *

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Journal In the Books of Sona Ltd.
Date	Particulars		L.F.	Debit Amount (Rs)	Credit Amount (Rs)

	Machinery A/c	Dr.		17,00,000
	To Mona Ltd.				17,00,000
	(Machinery purchased on credit from Sona Ltd.)

	Mona Ltd.	Dr.		3,40,000
	To Bank A/c				3,40,000
	(20% amount paid through cheque)

	Mona Ltd. (17,00,000 – 3,40,000)	Dr.		13,60,000
	To Equity Share Capital*				10,88,000
	To Securities Premium A/c*				2,72,000
	(Issued 10,880 shares of Rs 100 each to Mona Ltd. at 25% Premium)