Jain and Co. purchased a machine from Young Life Machine Limited for Rs. 3,80,000 . As per the purchase agreem

Question

Jain and Co. purchased a machine from Young Life Machine Limited for Rs. 3,80,000 . As per the purchase agreement, Rs. 20,000 was paid in cash and the balance was settled by the issue of shares of Rs. 100 each at a premium of 20\% . How many shares were issued by Jain and Co.?

Accepted Answer

1. Calculate the Balance Payable via Shares:

Total Purchase Price = Rs. 3, 80, 000

Less: Cash Paid = Rs. 20, 000

Amount Payable through Shares = 3, 80, 000 - 20, 000 = Rs. 3, 60, 000

Calculate the Issue Price per Share:

Face Value = Rs. 100

Premium = 20% of 100 = Rs. 20

Issue Price = 100 + 20 = Rs. 120 per share

Calculate Number of Shares to be Issued:

Number of Shares = \frac{Amount Payable}{Issue Price}

Number of Shares = \frac{3 , 60 , 000}{120} = 3, 00, 000 \div 100 = 3, 000 shares

Jain and Co. purchased a machine from Young Life Machine Limited for $Rs. 3, 80, 000$ . As per the purchase agreement, $Rs. 20, 000$ was paid in cash and the balance was settled by the issue of shares of $Rs. 100$ each at a premium of $20%$ . How many shares were issued by Jain and Co.?

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Jain and Co. purchased a machine from Young Life Machine Limited for Rs. 3,80,000. As per the purchase agreement, Rs. 20,000 was paid in cash and the balance was settled by the issue of shares of Rs. 100 each at a premium of 20%. How many shares were issued by Jain and Co.?