Question

Sandesh Ltd. took over the assets of Rs.7,00,000 and liabilities of Rs.2,00,000 from Sanchar Ltd. for a purchase consideration of Rs.4,59,500. Rs.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.	Dr. (Rs.)	Cr. (Rs.)
(i)           (ii)	Sundry Assets A/c            To Sundry Liabilities A/c            To Sanchar Ltd A/c            To Capital Reserve A/c (Being assets and liabilities purchased of Sanchar Ltd)   Sanchar Ltd              To Equity Share Capital A/c              To Securities Premium A/c              To Bank A/c (Being 41,000 Equity Shares issued of Rs.10 each at a premium of Rs.1 per share and 8,500 by bank draft)		7,00,000           4,59,500	2,00,000 4,59,500 40,500       4,10,000 41,000 8,500

 

Working Notes:

WN1: Calculation of Number of Equity Shares

Number of Shares Issued = Purchase Consideration / Issue Price

                                      = 4,51,000/11

                                      = 41,000 equity shares