Question

X Ltd. took over the assets of ₹ 6,60,000 and liabilities of ₹ 80,000 of Y Ltd . for ₹ 6,00,000. Give necessary journal entries in the books of X 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.

Answer 1

Journal
Date	Particulars		L.F.	Debit Amount (Rs)	Credit Amount (Rs)
	Assets A/c	Dr.		6,60,000
	Goodwill A/c (Balancing Figure)	Dr.		20,000
	To Liabilities A/c				80,000
	To Y Ltd.				6,00,000
	(Purchase of business took over)
a.	Y Ltd.	Dr.		6,00,000
	To Cash A/c				60,000
	To 12% Debentures A/c				5,40,000
	(Purchase consideration discharged)
b.	Y 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)