Question

Ananya Ltd. purchased an established business for ₹ 2,00,000 payable ₹ 65,000 by cheque and the balance by issuing 9% Debentures of ₹ 100 each at a discount of 10%.

Give Journal entries in the books of Ananya Ltd.

Answer 1

Journal Entries In the Books of Ananya Ltd.
Date	Particulars	L.F.	Dr. (₹)	Cr. (₹)
1.	Business Purchase A/c   ...Dr.		2,00,000
	To Vendor A/c			2,00,000
	(Business purchased for ₹ 2,00,000)
2.	Vendor A/c   ...Dr.		2,00,000
	Discount on Issue of Debentures A/c   ...Dr.		15,000
	To Bank A/c			65,000
	To 9% Debentures A/c			1,50,000
	(Payment made by cheque and by issue of 1,500, 9% Debentures of ₹ 100 each at 10% discount)

Working note:

Purchase consideration:

₹ 2,00,000

Amount paid by cheque:

₹ 65,000

Balance payable by debentures:

₹ 2,00,000 − ₹ 65,000 = ₹ 1,35,000

Issue price of each debenture at 10% discount:

₹ 100 − ₹ 10 = ₹ 90

Number of debentures issued:

`(1,35,000)/90 = 1,500` Debentures

Face value of debentures:

1,500 × ₹ 100 = ₹ 1,50,000

Discount on Issue of Debentures:

₹ 1,50,000 − ₹ 1,35,000 = ₹ 15,000