(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 | | …

Term	Meaning	Match
(1) Under subscription	Subscription below the offered shares	(iii)
(2) Over subscription	Subscription above the offered shares	(ii)
(3) Calls in arrear	Amount unpaid on calls	(iv)

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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