Question

M Ltd took over assets of Rs.9,00,00,000 and liabilities of Rs.70,00,000 of S Ltd and issued 8% Debentures of Rs.100 each. Record necessary entries in the books of M Ltd.

Answer 1

$\text{Journal Entries}$
$\begin{array}{cccccc}\text{Date}& \text{Particulars}& & \text{LF}& \text{Amt. (Dr)}& \text{Amt.(Cr)}\\ \text{(i)}& \text{Sundry Assets A/c}& \text{Dr}& & 9,00,00,000& \\ & \text{To Sundry Liabilities A/c}& & & & 70,00,000\\ & \text{To S Ltd (Balance figure as capital) A/c}& & & & 8,30,00,000\\ & \text{(Assets and liabilities of S Ltd taken over)}& & & & \\ & \underset{–}{}& & & & \\ \text{(ii)}& \text{S Ltd}& \text{Dr}& & 8,30,00,000& \\ & \text{To 8\% Debentures A/c (Working note)}& & & & 8,30,00,000\\ & \text{(8,30,000 8\% debentures at 100 each}& & & & \\ & \text{issued to S Ltd in consideration of assets and}& & & & \\ & \text{liabilities.)}& & & & \end{array}$

Working Note :

Amount Payable to S, Ltd By M Ltd = Rs. 8,30,00,000

8% Debentures of Rs.100 each to be issued = $\frac{8,30,00,000}{100}$

= 8,30,000 Debentures