Ownclasses

Madhav Ltd. issued fully paid equity shares of Rs. 80 each at a discount of Rs. 5 per share for the purchase of a running business from Gupta Bros. for a sum of Rs. 15,00,000.
The assets and liabilities consisted of the following:
Plant Rs. 5,00,000; Trucks Rs. 7,00,000; Stock Rs. 3,00,000; Machinery Rs. 6,00,000 and Sundry Creditors Rs. 5,00,000.
You are required to pass necessary journal entries for the above transactions in the books of Madhav Ltd.

Answer


Working Note:
Calculation of Number of Equity Shares Issued:
Purchase consideration = 15,00,000
Number of equity shares to be issued = 15,00,000/(80-5)
=15,00,000/75 = 20,000 equity shares