Question

R Ltd. purchased the assets of S Ltd. for ₹5,00,000. It also agreed to take over the liabilities of S Ltd. amounted to ₹ 2,00,000 for a purchase consideration of ₹2,80,000 . The payment of S Ltd. was made by issue of 9% Debentures of ₹ 100 each at par.
Pass necessary journal entries in the books of R Ltd.

Answer 1

Books of R Ltd.
Journal
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
	Assets A/c	Dr.		5,00,000
	To Liabilities A/c				2,00,000
	To S Ltd.				2,80,000
	To Capital Reserve A/c (balancing figure)				20,000
	(Asset purchased and liabilities took over from S Ltd.)
	S Ltd.	Dr.		2,80,000
	To 9% Debentures A/c				2,80,000
	(Issued 2,800 9% Debentures of Rs 100 each)

Working Note: