(a) Vairam Ltd. purchased furniture worth of ₹ 5,50,000 from Ravi Furniture Ltd. It issued equity shares of ₹ 10 each fully paid in satisfaction of their claim. What entries will be made if such issue is :

(i) at par
(ii) at premium of 10%

OR

(b) Saranya Ltd. issued 20,000 equ

Question

(a) Vairam Ltd. purchased furniture worth of ₹ 5,50,000 from Ravi Furniture Ltd. It issued equity shares of ₹ 10 each fully paid in satisfaction of their claim. What entries will be made if such issue is :

(i) at par
(ii) at premium of 10%

OR

(b) Saranya Ltd. issued 20,000 equity shares of ₹ 10 each to the public at par. The details of the amount payable on the shares are as follows.

| Particulars | Amount |
| --- | --- |
| On Application | ₹ 3 per share |
| On Allotment | ₹ 4 per share |
| On First and Final call | ₹ 3 per share |

Application money was received on 30,000 shares. Excess application money was refunded immediately.

Pass Journal entries to record the above.

Accepted Answer

>

> [!TLDR]
> (a) Furniture bought for ₹5,50,000: at par 55,000 shares; at 10% premium 50,000 shares (capital 5,00,000 + premium 50,000). (b) 20,000 shares of ₹10 with 30,000 applied — refund excess ₹30,000, then allotment and call entries.
>
> ## (a) Vairam Ltd. — Issue of shares to vendor
>
> **Purchase entry (common to both cases):**
>
> | Particulars | Dr ₹ | Cr ₹ |
> | --- | --- | --- |
> | Furniture A/c Dr | 5,50,000 | |
> |   To Ravi Furniture Ltd. | | 5,50,000 |
>
> **(i) Issue at par** — Number of shares = 5,50,000 ÷ 10 = **55,000 shares**
>
> | Particulars | Dr ₹ | Cr ₹ |
> | --- | --- | --- |
> | Ravi Furniture Ltd. Dr | 5,50,000 | |
> |   To Equity Share Capital A/c | | 5,50,000 |
>
> **(ii) Issue at 10% premium** — Issue price = ₹11; Number of shares = 5,50,000 ÷ 11 = **50,000 shares**
>
> | Particulars | Dr ₹ | Cr ₹ |
> | --- | --- | --- |
> | Ravi Furniture Ltd. Dr | 5,50,000 | |
> |   To Equity Share Capital A/c (50,000 × 10) | | 5,00,000 |
> |   To Securities Premium A/c (50,000 × 1) | | 50,000 |
>
> ## (b) Saranya Ltd. — Journal Entries (20,000 shares of ₹10 at par)
>
> Applied for 30,000 shares; excess 10,000 shares' money refunded.
>
> | Particulars | Dr ₹ | Cr ₹ |
> | --- | --- | --- |
> | Bank A/c Dr (30,000 × 3) | 90,000 | |
> |   To Equity Share Application A/c | | 90,000 |
> | *(Application money on 30,000 shares)* | | |
> | Equity Share Application A/c Dr | 90,000 | |
> |   To Equity Share Capital A/c (20,000 × 3) | | 60,000 |
> |   To Bank A/c (10,000 × 3, refund) | | 30,000 |
> | *(Application money transferred; excess refunded)* | | |
> | Equity Share Allotment A/c Dr (20,000 × 4) | 80,000 | |
> |   To Equity Share Capital A/c | | 80,000 |
> | *(Allotment money due)* | | |
> | Bank A/c Dr | 80,000 | | …

Particulars	Amount
On Application	₹ 3 per share
On Allotment	₹ 4 per share
On First and Final call	₹ 3 per share

Particulars	Dr ₹	Cr ₹
Ravi Furniture Ltd. Dr	5,50,000
To Equity Share Capital A/c		5,50,000

Particulars	Dr ₹	Cr ₹
Ravi Furniture Ltd. Dr	5,50,000
To Equity Share Capital A/c (50,000 × 10)		5,00,000
To Securities Premium A/c (50,000 × 1)		50,000

Particulars	Dr ₹	Cr ₹
Bank A/c Dr (30,000 × 3)	90,000
To Equity Share Application A/c		90,000
(Application money on 30,000 shares)
Equity Share Application A/c Dr	90,000
To Equity Share Capital A/c (20,000 × 3)		60,000
To Bank A/c (10,000 × 3, refund)		30,000
(Application money transferred; excess refunded)
Equity Share Allotment A/c Dr (20,000 × 4)	80,000
To Equity Share Capital A/c		80,000
(Allotment money due)
Bank A/c Dr	80,000

(a) Vairam Ltd. — Issue of shares to vendor

(b) Saranya Ltd. — Journal Entries (20,000 shares of ₹10 at par)

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