The following balances were stood in the Balance Sheet of Gauru Ltd. as on 31 st March, 2018: (i) Share capital—Issued and subscribed : 2,00,000, 9% Preference shares of ₹100 each fully paid : ₹200 lakh 50,00,000 Equity

CS Executive · Corporate and Management Accounting · PYQS · December 2018
The following balances were stood in the Balance Sheet of Gauru Ltd. as on 31 st March, 2018: (i) Share capital—Issued and subscribed : 2,00,000, 9% Preference shares of ₹100 each fully paid : ₹200 lakh 50,00,000 Equity shares of ₹10 each fully paid : ₹500 lakh (ii) Reserves and surplus : Capital Reserve ₹40,00,000 (created due to revaluation of fixed assets) Securities Premium ₹60,00,000 General Reserve ₹35,00,000 Surplus (Statement of Profit & Loss) ₹80,00,000 On 1 st April, 2018 the company decided to capitalise its reserves by way of issue of bonus shares at the rate of one equity share for every four equity shares held. Show necessary journal entries in the books of the company.

Answer & Explanation:

Journal Entry in the books of Gauru Ltd. Particulars Debit (₹ in Lacs) Credit (₹ in Lacs) 1. Security Premium A/c Dr. 60 General Reserve A/c Dr. 35 Surplus A/c Dr. 30 To Bonus to Equity Shareholders A/c 125 (Being bonus declared out of reserves) 2. Bonus to Equity Shareholders A/c Dr. 125 To Equity Share Capital A/c 125 (Being bonus shares issued)

Topics: Corporate Accounting

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