Gupta Ltd. issued 1,000 equity shares of Rs. 100 each as fully paid-up, to the vendor, in consideration of the purchase of plant and machinery worth Rs. 1,00,000. Which of the following entry will be recorded in the company's journal for it?

When a company issues shares to a vendor in exchange for an asset (plant and machinery), the transaction involves settling the vendor's account by allotting shares instead of making cash payment.

The complete accounting treatment involves two conceptual steps:

Step 1: Recording the purchase of asset

Plant and Machinery A/c is debited and Vendor A/c is credited for Rs. 1,00,000

Step 2: Settling vendor's dues by issuing shares

When 1,000 equity shares of Rs. 100 each are issued as fully paid-up to discharge the vendor's account:

• Vendor A/c represents a liability (amount owed to vendor) which needs to be removed → Debit
• Share Capital A/c represents the capital raised by issuing shares → Credit

The journal entry for issuing shares to vendor:

$\text{Vendor A/c Dr.} \quad 1,00,000$

$\qquad \text{To Share Capital A/c} \quad 1,00,000$

This entry eliminates the vendor's outstanding amount and simultaneously records the share capital issued. No bank account is involved since this is a non-cash transaction where shares are directly issued to acquire the asset.

The formula used: Number of shares × Face value per share = 1,000 × 100 = Rs. 1,00,000

Correct Option: 4