Jain and Co. purchased a machine from Young Life Machine Limited for Rs. 3,80,000. As per the purchase agreement, Rs. 20,000 were paid in cash and balance by issue of shares of Rs. 100 each. How many shares are issued if the shares are issued at 20% premium.
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → 3,000 shares
Shares issued to a vendor settle only the part of the price not paid in cash, and each share settles its issue price, face value plus premium.
Amount to be paid in shares = Rs. 3,80,000 − Rs. 20,000 = Rs. 3,60,000
Issue price = Rs. 100 + 20% premium = Rs. 120
Number of shares = Rs. 3,60,000 ÷ Rs. 120 = 3,000 shares
Dividing by the face value of Rs. 100 gives 3,600 shares, which is the answer only for an issue at par.
NCERT (2026-27 edition):
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