Bought Shares Journal Entry
When a company purchases shares, it records the transaction to reflect the investment in its financial statements. The journal entry typically involves debiting an investment account and crediting the cash or bank account.
Example: Buying Shares
Scenario: A company buys shares worth ₹100,000.
Journal Entry:
| Particulars | Debit (₹) | Credit (₹) |
|---|---|---|
| Investment in Shares A/c | 100,000 | |
| To Cash/Bank A/c | 100,000 | |
| (Being shares purchased for cash) |
Detailed Example:
Example 1: Buying Shares with a Brokerage Fee
Assume the company buys shares worth ₹100,000 and pays a brokerage fee of ₹1,000.
Journal Entry:
| Particulars | Debit (₹) | Credit (₹) |
|---|---|---|
| Investment in Shares A/c | 101,000 | |
| To Cash/Bank A/c | 101,000 | |
| (Being shares purchased with brokerage fee) |
Example 2: Buying Shares on Credit
Assume the company buys shares worth ₹100,000 on credit.
Journal Entry:
| Particulars | Debit (₹) | Credit (₹) |
|---|---|---|
| Investment in Shares A/c | 100,000 | |
| To Accounts Payable A/c | 100,000 | |
| (Being shares purchased on credit) |
Example 3: Buying Shares with Partial Payment
Assume the company buys shares worth ₹100,000, pays ₹60,000 in cash, and the remaining ₹40,000 is on credit.
Journal Entry:
| Particulars | Debit (₹) | Credit (₹) |
|---|---|---|
| Investment in Shares A/c | 100,000 | |
| To Cash/Bank A/c | 60,000 | |
| To Accounts Payable A/c | 40,000 | |
| (Being shares purchased with partial payment) |
