(I) A company purchased the following assets at an agreed price of Rs. 5,50,000. Plant Rs. 2,60,000 Building Rs. 3,65,000 The company paid the agreed price by issuing shares of Rs. 100 each at 10%…

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

Step 1: Determine the Number of Shares Issued

The company purchased assets worth Rs. 5,50,000 by issuing shares of Rs. 100 each at a 10% premium.

• Face value of each share = Rs. 100
• Premium per share = 10% of Rs. 100 = Rs. 10
• Issue price per share = Face value + Premium = Rs. 110

To raise Rs. 5,50,000, the number of shares issued is calculated as: $$\text{Number of shares}=\frac{\text{Total amount}}{\text{Issue price per share}}=\frac{5,50,000}{110}=5,000\text{ shares}$$

Step 2: Journal Entries

1. Entry for Purchase of Assets (at agreed price)

   Plant A/c           Dr. 2,60,000
   Building A/c        Dr. 3,65,000
   To Assets Purchased A/c     5,50,000
   (Being assets purchased at an agreed price)
   

2. Entry for Issue of Shares (at premium)

   Bank A/c            Dr. 5,50,000
   To Share Capital A/c       5,00,000
   To Securities Premium A/c  50,000
   (Being 5,000 shares of Rs. 100 each issued at 10% premium)
   

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(II) Entries for Issue and Redemption of Debentures

Step 1: Issue of Debentures at Par

The company issued 4,000 debentures of Rs. 100 each at par.

• Total issue amount = 4,000 × Rs. 100 = Rs. 4,00,000

Journal Entry:

Bank A/c            Dr. 4,00,000
To 10% Debentures A/c     4,00,000
(Being 4,000 debentures issued at par)

Step 2: Redemption of Debentures at 10% Premium

After 5 years, the debentures are redeemed at a 10% premium.

• Premium per debenture = 10% of Rs. 100 = Rs. 10
• Redemption amount per debenture = Face value + Premium = Rs. 110
• Total redemption amount = 4,000 × Rs. 110 = Rs. 4,40,000

Journal Entry:

10% Debentures A/c   Dr. 4,00,000
Premium on Redemption of Debentures A/c Dr. 40,000
To Bank A/c               4,40,000
(Being debentures redeemed at 10% premium)

Step 3: Transfer of Premium to General Reserve (if required)

If the company transfers the premium to General Reserve, an additional entry is made:

Premium on Redemption of Debentures A/c Dr. 40,000
To General Reserve A/c     40,000
(Being premium on redemption transferred to General Reserve)