Star Ltd. took over the assets of ₹ 6,60,000 and liabilities of ₹ 80,000 of Moon Ltd. for ₹ 6,00,000. Give necessary Journal entries in the books of Star Ltd. assuming that:
Case (a): The purchase consideration was payable 10% in cash and the balance in 5,400; 12% Debentures of ₹ 100 each.
Case (b): The purchase consideration was payable 10% in cash and the balance in 4,500; 12% Debentures of ₹ 100 each issued at 20% premium.

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Solution

Journal

Date

Particulars

L.F.

Debit

Amount

(₹)

Credit

Amount

(₹)

Assets A/c

Dr.

6,60,000

Goodwill A/c (Balancing Figure)

Dr.

20,000

To Liabilities A/c

80,000

To Moon Ltd.

6,00,000

(Purchase of business took over)

a.

Moon Ltd.

Dr.

6,00,000

To Cash A/c

60,000

To 12% Debentures A/c

5,40,000

(Purchase consideration discharged)

b.

Moon Ltd.

Dr.

6,00,000

To Cash A/c

60,000

To 12% Debentures A/c

4,50,000

To Security Premium Reserve A/c

90,000

( Purchase consideration discharged)

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Journal
Date	Particulars		L.F.	Debit Amount (₹)	Credit Amount (₹)
	Assets A/c	Dr.		6,60,000
	Goodwill A/c (Balancing Figure)	Dr.		20,000
	To Liabilities A/c				80,000
	To Moon Ltd.				6,00,000
	(Purchase of business took over)

a.	Moon Ltd.	Dr.		6,00,000
	To Cash A/c				60,000
	To 12% Debentures A/c				5,40,000
	(Purchase consideration discharged)

b.	Moon Ltd.	Dr.		6,00,000
	To Cash A/c				60,000
	To 12% Debentures A/c				4,50,000
	To Security Premium Reserve A/c				90,000
	( Purchase consideration discharged)