Question

ABC Ltd., is in the business of manufacturing rubber products. It decided to install RO water System for providing clean and hygienic drinking water to its employees. It named the project as 'Employees Healthcare'. It purchased RO water machines from XYZ Ltd., for Rs 11,00,000. It was agreed that purchase consideration be paid by issuing 10$\%$ debentures of Rs 100 each (i) at a premium of 10$\%$, (ii) at par. Pass necessary Journal entries.

Answer 1

JOURNAL

$\begin{array}{cccccc}\text{Date}& \text{Particulars}& \text{L.F.}& \text{Debit}& \text{Credit}& \\ & & & \left(\text{Rs}\right)& \left(\text{Rs}\right)& \\ & \text{Machinery A/c}\text{Dr.}& & 11,00,000& & \\ & \text{To Vendor A/c}& & & 11,00,000& \\ & (\underset{–}{\text{Being RO water machine purchased)}}& & & & \\ \left(i\right)& \text{Vendor A/c}\text{Dr.}& & 11,00,000& & \\ & \text{To}10\%\text{Debentures A/c}& & & 10,00,000& \\ & \text{To Securities Premium Reserve A/c}& & & 1,00,000& \\ & (\underset{–}{\text{Being debentures issued at a premium of}10\%\text{to vendor})}& & & & \\ \left(ii\right)& \text{Vendor A/c}\text{Dr.}& & 11,00,000& & \\ & \text{To}10\%\text{Debentures A/c}& & & 11,00,000& \\ & \text{(Being Debuntures issued at par to vendor)}& & & & \end{array}$