T.S. Grewal Class 12 Vol 2 Chapter 1 Q.37 - Share Capital

Question 37

Random Ltd. took over the running business of Mature Ltd., comprising Assets of ₹45,00,000 and Liabilities of ₹6,40,000, for a purchase consideration of ₹36,00,000. The amount was settled by a bank draft of ₹1,50,000 and the balance by issuing 12% Preference Shares of ₹100 each at a 15% premium. Pass entries in the books of Random Ltd. (CBSE Sample Paper 2023)

Solution

JOURNAL (Books of Random Ltd.)

Date	Particulars	L.F.	Dr. (₹)	Cr. (₹)
	Assets A/c    Dr.		45,00,000
	To Sundry Liabilities A/c			6,40,000
	To Mature Ltd.			36,00,000
	To Capital Reserve A/c			2,60,000
	(Purchase of assets and liabilities of Mature Ltd.; net assets acquired at a bargain, the surplus credited to Capital Reserve)
	Mature Ltd.    Dr.		36,00,000
	To 12% Preference Share Capital A/c (30,000 × ₹100)			30,00,000
	To Securities Premium A/c (30,000 × ₹15)			4,50,000
	To Bank A/c			1,50,000
	(30,000 12% Preference Shares of ₹100 each issued at a 15% premium, i.e. ₹115 per share, and the balance settled by bank draft)

Working Note: Number of Preference Shares issued = (36,00,000 – 1,50,000) ÷ 115 = 34,50,000 ÷ 115 = 30,000 shares.