Question

Nikhil and Ashwin Limited bought the business of Agarwal Limited, consisting of sundry assets of Rs. 3,60,000 and sundry creditors of Rs. 1,00,000, for a consideration of Rs. 3,07,200. It issued 14% debentures of Rs. 100 each, fully paid at a discount of 4% in satisfaction of purchase consideration. Record necessary journal entries.

Answer 1

Journal Entries
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
1.	Sundry Assets A/c   ...Dr.		3,60,000	-
	Goodwill A/c   ...Dr.		47,200	-
	To Agarwal Ltd. A/c		-	3,07,200
	To Sunday Creditor’s A/c		-	1,00,000
	(Being a business purchased from Agarwal Ltd.)
2.	Agarwal Ltd. A/c   ...Dr.		3,07,200	-
	Discount A/c   ...Dr.		12,800	-
	To 14% Debentures A/c		-	3,20,000
	(Being 3,200 debentures issued of ₹ 100 each at a discount of 4%)