R Ltd purchased a building from X Infra for Rs. 6,00,000 and the payment is to be made by the issue of shares for Rs. 100 each at a premium of 20%. Calculate the number of shares to be issued.
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → 5000 shares
When a company pays a vendor for an asset by issuing shares, the number of shares is the amount payable divided by the issue price. At a premium, the issue price is face value plus premium.
Issue price = Rs. 100 + 20% of Rs. 100 = Rs. 120
Number of shares = Amount payable ÷ Issue price
= Rs. 6,00,000 ÷ Rs. 120 = 5,000 shares
Dividing by the face value of Rs. 100 instead gives 6,000 shares, which forgets that each share is issued for Rs. 120.
NCERT (2026-27 edition):
NCERT (2026-27 edition):
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