Question

X Ltd purchased a machinery from Y for an agreed purchase consideration of Rs.4,40,000 to be satisfied by the issue of 12% Debentures of Rs.100 each at a premium of Rs.10 per Debenture. Journalise the transaction.

Answer 1

$\text{Journal Entries}$
$\begin{array}{cccccc}\text{Date}& \text{Particulars}& & \text{LF}& \text{Amt. (Dr)}& \text{Amt.(Cr)}\\ \text{(i)}& \text{Machinery A/c}& \text{Dr}& & 4,40,000& \\ & \text{To Y}& & & & 4,40,000\\ & \text{(Machinery purchased from Y)}& & & & \\ & \underset{–}{}& & & & \\ \text{(ii)}& \text{Y}& \text{Dr}& & 4,40,000& \\ & \text{To 12\% Debentures A/c}& & & & 4,00,000\\ & \text{To Securities Premium A/c}& & & & 40,000\\ & \text{(Issued 4,000 debentures at premium}& & & & \\ & \text{of 10\%}& & & & \end{array}$

Working Note :

Amount payable to Y = Rs.4,40,000

Number of debentures to be issued at 10% premium = $\frac{4,40,000}{110}$

= 4,000 debentures