Question

Reliance Ltd. purchased machinery costing ​₹ 1,35,000 . It was agreed that the purchase consideration be paid by issuing 9% Debentures of ​₹ 100 each . Assume debentures have been issued
(i) at par and
(ii)at a discount of 10%.
Give necessary journal entries.

Answer 1

Case 1

Books of Reliance Ltd.
Journal
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
	Machinery A/c	Dr.		1,35,000
	To Vendor A/c				1,35,000
	(Machinery Purchases)
	Vendor A/c	Dr.		1,35,000
	To 9% Debenture A/c				1,35,000
	(Issued 1,350 debentures at par)

Working Note:

Case 2

Journal
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
	Machinery A/c	Dr.		1,35,000
	To Vendor A/c				1,35,000
	(Machinery purchased)
	Vendor A/c	Dr.		1,35,000
	Discount on Issue of Debentures A/c	Dr.		15,000
	To 9% Debenture A/c				1,50,000
	(Issued 1,500 debentures at 10% discount)

Working Note: