sir/maam can you explain me first two enteries which are given in the solution with respect of question
10. Vats Ltd. purchased machinery from Anupam Ltd. Vats Ltd. paid Anupam Ltd. as follows :
(i) By issuing 2,500 equity shares of Rs 10 each at a premium of 30%
(ii) By issuing 500, 9% Debentures of 100 each at a discount of 10%
(iii) Balance by giving a promissory note of Rs 24,000 payable after two months
Pass necessary journal entries for the purchase of machinery and payment to Anupam Ltd. in the books of
Vats Ltd.
Dear Student
See here Vats Ltd. has purchased a machinery from Anupam ltd. and Purchase consideration is paid in the form of Shares and Debentures and Promissory note. So firstly we need to find the purchase consideration of machinery and this hall be equal to Price at which all the shares and Debentures and promissory notes are issued to Anupam Ltd.
Therefore Calculation of purchase consideration :
Now we know the purchase consideration, So in the first entry just make purchase consideration Due, i.e entry of purchase of machinery from Anupam Ltd .
In the next entry, we have to issue share to Anupam Ltd as per purchase consideration, the issue of share entry is as usual, only in place of cash or bank Anupam Ltd would come as we are issuing shares to them.
Hope this helps
Regards
See here Vats Ltd. has purchased a machinery from Anupam ltd. and Purchase consideration is paid in the form of Shares and Debentures and Promissory note. So firstly we need to find the purchase consideration of machinery and this hall be equal to Price at which all the shares and Debentures and promissory notes are issued to Anupam Ltd.
Therefore Calculation of purchase consideration :
| Name of Security | Number | Face Value | Issued At | Issue Price per security | Total Issue Price |
| Shares | 2,500 | 10 | 30% Premium | 13 | 32,500 |
| Debentures | 500 | 100 | 10% Discount | 90 | 45,000 |
| Promisory Note | 1 | 24,000 | |||
| Total Purchase Consideration | 101,500 | ||||
Now we know the purchase consideration, So in the first entry just make purchase consideration Due, i.e entry of purchase of machinery from Anupam Ltd .
| Machinery A/c | Dr. | 1,01,500 | |
| To Anupam Ltd. | 1,01,500 | ||
| (Being machinery purchased) | |||
In the next entry, we have to issue share to Anupam Ltd as per purchase consideration, the issue of share entry is as usual, only in place of cash or bank Anupam Ltd would come as we are issuing shares to them.
| Anupam Ltd. A/c | Dr. | 32,500 | |
| To Equity share capital (2,500 x 10) | 25,000 | ||
| To Securities Premium A/c | 7,500 | ||
| (Being shares issued at 305 premium as purchase consideration) | |||
Hope this helps
Regards