Question

C India Ltd. purchased machinery from B India Ltd. Payment to B India Ltd. was made as follows:
(i) By issuing 10,000 equity shares of Rs 10 each at a premium of 20%.
(ii) By issuing 1000, 9% debentures of Rs 100 each at a discount of 5%.
(iii) Balance by giving a bank draft of Rs 37,000.

Pass necessary journal entries in the books of C India Ltd. for the purchase of machinery and payment to B India Ltd.  

Answer 1

Journal                                                 In the books of C Ltd.
Date	Particulars		L.F.	Debit Amount (Rs)	Credit Amount (Rs)
	Machinery A/c	Dr.		2,52,000
	To B Ltd.				2,52,000
	(Purchased machinery from B Ltd.)
	B Ltd. (1,20,000 + 95,000 + 37,000)	Dr.		2,52,000
	Discount on Issue of Debentures A/c (1,000 × 5)	Dr.		5,000
	To Equity Share Capital A/c (10,000 × 10)				1,00,000
	To Securities Premium A/c (10,000 × 2)				20,000
	To 9% Debentures A/c (1,000 × 100)				1,00,000
	To Bank A/c				37,000
	(Issued 10,000 equity shares of Rs 10 each at a premium of 20%, issued 1,000 9% Debentures of Rs 100 each at a discount of 5% and balance by issuing a bank draft)