Gautam ltd purchase a running business of karan ltd for a sum of rs 3200000 payable by issue of equity - Accountancy - Accounting for Share Capital

Question

Gautam ltd purchase a running business of karan ltd for a sum of rs
3200000 payable by issue of equity shares of ?100 each at premium
of ?20 per share the assets and liability are : machinery ?8,00,000
land and building ?12,00,000 stock ?9,00,000 and creditors
?2,00,000 pass necessary journal entries

Neha Chopra · Accepted Answer

Dear Student,

Journal entries are as follows:

Date
Particulars
LF
Amount (in
Rs)
Amount (in
Rs)

Machinery
A/c
Dr
8,00,000

Land & Building
A/c

12,00,000

Stock
A/c

9,00,000

Goodwill A/c (balancing
figure)

5,00,000

To Creditors
A/c

2,00,000

To Karan
Ltd

32,00,000

(Business purchased of
Karan Ltd)

Karan
Ltd
Dr
32,00,000

To Equity share Capital
A/c

26,66,600

To Securities premium
A/c

5,33,320

To Cash
A/c

80

(Paid to Karan Ltd
through issue of 26,666 equity shares @ Rs 20
premium)

No of shares =
32,00,000120= 26,666 shares
Regards,

Date	Particulars	LF	Amount (in Rs)	Amount (in Rs)
	Machinery A/c	Dr	8,00,000
	Land & Building A/c		12,00,000
	Stock A/c		9,00,000
	Goodwill A/c (balancing figure)		5,00,000
	To Creditors A/c			2,00,000
	To Karan Ltd			32,00,000
	(Business purchased of Karan Ltd)

	Karan Ltd	Dr	32,00,000
	To Equity share Capital A/c			26,66,600
	To Securities premium A/c			5,33,320
	To Cash A/c			80
	(Paid to Karan Ltd through issue of 26,666 equity shares @ Rs 20 premium)