(I) A company Ltd. issued 9,000 shares of Rs. 100 each at a premium of Rs. 10 per share to purchase the following assets. Land and Building Rs. 6,50,000 Office Equipment Rs. 3,40,000 Required:…

(I) Journal Entries for Purchase of Assets and Issue of Shares

Given:

• Shares issued: 9,000 shares of Rs. 100 each at a premium of Rs. 10 per share.
• Assets purchased:
  • Land and Building: Rs. 6,50,000
  • Office Equipment: Rs. 3,40,000
• Total assets purchased: Rs. 6,50,000 + Rs. 3,40,000 = Rs. 9,90,000

Calculations:

• Nominal value of shares issued: 9,000 × Rs. 100 = Rs. 9,00,000
• Premium received: 9,000 × Rs. 10 = Rs. 90,000
• Total amount received from shareholders: Rs. 9,00,000 + Rs. 90,000 = Rs. 9,90,000

Journal Entries:

1. Entry for purchase of assets:

   Land and Building A/c       Dr. 6,50,000
   Office Equipment A/c        Dr. 3,40,000
       To Assets Purchased A/c         9,90,000
   

2. Entry for issue of shares (including premium):

   Bank A/c                     Dr. 9,90,000
       To Share Capital A/c         9,00,000
       To Share Premium A/c         90,000
   

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(II) Journal Entries for Issue and Redemption of Debentures

Given:

• Debentures issued: 5,000, 7% debentures of Rs. 100 each at par.
• Redemption after 5 years at 5% discount.

Calculations:

• Face value of debentures: 5,000 × Rs. 100 = Rs. 5,00,000
• Discount on redemption: 5% of Rs. 5,00,000 = Rs. 25,000
• Amount paid at redemption: Rs. 5,00,000 – Rs. 25,000 = Rs. 4,75,000

Journal Entries:

1. Entry for issue of debentures (at par):

   Bank A/c                     Dr. 5,00,000
       To 7% Debentures A/c         5,00,000
   

2. Entry for redemption of debentures (after 5 years):

   7% Debentures A/c             Dr. 5,00,000
       To Bank A/c                     4,75,000
       To Discount on Redemption A/c     25,000
   

Additional Note (if interest is paid annually):

If interest is paid annually, the following entry would be made each year:

7% Interest on Debentures A/c    Dr. 35,000 (5,000 × 7% × 1)
    To Bank A/c                     35,000