1
Question
Wellbeing Ltd. took over assets of ₹ 9,80,000 and liabilities of ₹ 40,000 of HDR Ltd. at an agreed value of ₹ 9,00,000. Wellbeing Ltd. paid to HDR Ltd. by issue of 9% Debentures of ₹ 100 each at a premium of 20%. Pass necessary Journal entries to record the above transactions in the books of Wellbeing Ltd.
Open in App
Solution
In the books of Wellbeing Ltd.
Journal
Date
Particulars
L.F.
Debit
Amount
(₹)
Credit
Amount
(₹)
Sundry Assets A/c
Dr.
9,80,000
To Sundry Liabilities A/c
40,000
To HDR Ltd.
9,00,000
To Capital Reserve A/c
40,000
(Being the purchase of business of HDR Ltd.)
HDR Ltd. A/c
Dr.
9,00,000
To 9% Debentures A/c (7,500 × 100)
7,50,000
To Securities Premium Reserve A/c (7,500 × 20)
1,50,000
(Being 36,000, 10% debentures issued as purchase consideration)
Working Notes:
Number of Debentures issued = (9,00,000/120) = 7,500 debentures
|
In the books of Wellbeing Ltd. Journal |
|||||
|
Date |
Particulars |
|
L.F. |
Debit |
Credit |
|
|
Sundry Assets A/c |
Dr. |
9,80,000 |
|
|
|
|
To Sundry Liabilities A/c |
|
|
40,000 |
|
|
|
To HDR Ltd. |
|
|
9,00,000 |
|
|
|
To Capital Reserve A/c |
|
|
40,000 |
|
|
|
(Being the purchase of business of HDR Ltd.) |
|
|
|
|
|
|
|
|
|
||
|
|
HDR Ltd. A/c |
Dr. |
9,00,000 |
|
|
|
|
To 9% Debentures A/c (7,500 × 100) |
|
|
7,50,000 |
|
|
|
To Securities Premium Reserve A/c (7,500 × 20) |
|
|
1,50,000 |
|
|
|
(Being 36,000, 10% debentures issued as purchase consideration) |
|
|
||
Working Notes:
Number of Debentures issued = (9,00,000/120) = 7,500 debentures
Suggest Corrections
4
Similar questions