Question

Sandesh Ltd. took over the assets of ₹ 7,00,000 and liabilities of   ₹ 2,00,000 from Sanchar Ltd. for a purchase consideration of  ₹ 4,59,500.  ₹ 8,500 were paid by accepting a draft in favour of Sanchar Ltd. payable after three months and the balance was paid by issue of equity shares of  ₹ 10 each at a premium of 10% in favour of Sanchar Ltd.
Pass necessary journal entries for the above transactions in the books of Sandesh Ltd.

Answer 1

Sandesh Ltd.
Journal 

Date	Particulars		L.F.	Debit Amount (Rs)	Credit Amount (Rs)
(i)	Sundry Assets A/c	Dr.		7,00,000
	To Sundry Liabilities A/c				2,00,000
	To Sanchar Ltd.				4,59,500
	To Capital Reserve A/c				40,500
	(Purchase of assets and liabilities of Sanchar Ltd.)
(ii)	Sanchar Ltd.	Dr.		4,59,500
	To Equity Share Capital A/c				4,10,000
	To Securities Premium A/c				41,000
	To Bank A/c				8,500
	(41,000 Equity Shares issued of Rs 10 each at a premium of Re 1 per share and Rs 8,500 by bank draft)

Working Notes: 

WN1: Calculation of Number of Equity Shares 

Number of shares issued =`"Purhase consideration "/"issue Price"`

`= 451000/11 = 41000` equity shares