Question

Nupur Ltd. took over Plant and Machinery worth ₹ 8,00,000, Stock worth ₹ 7,00,000 and Sundry Debtors for ₹ 6,00,000 from Vandna Ltd. for a purchase consideration of ₹ 22,80,000. Nupur Ltd. paid the purchase consideration by issuing 8% Debentures of ₹ 200 each. Pass entries in the books of Nupur Ltd. when:

1. Debentures were issued at 5% discount.
2. Debentures were issued at 20% premium.

Answer 1

a. Debentures were issued at a 5% discount:

In the books of Nupur Ltd.
Journal Entries
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
1.	Plant & Machinery A/c  .....Dr.		8,00,000	-
	Stock A/c  .....Dr.		7,00,000	-
	Sundry Debtors A/c  .....Dr.		6,00,000	-
	Goodwill A/c  .....Dr. (Balancing Figure)		1,80,000	-
	To Vandna Ltd.		-	22,80,000
	(Assets taken over from Vandna Ltd.)
2.	Vandna Ltd. A/c  .....Dr.		22,80,000	-
	Discount on Issue of Debentures A/c  .....Dr.		1,20,000	-
	To 8% Debentures A/c		-	24,00,000
	(12,000 debentures of ₹200 each issued at 5% discount.)

Working Note:

1. Issue price = ₹ 200 − 5% = ₹ 190 per debenture
2. Number of debentures = ₹ 22,80,000 ÷ ₹ 190 = 12,000 debentures
3. Face value = 12,000 × ₹ 200 = ₹ 24,00,000
4. Discount on issue = ₹ 24,00,000 − ₹ 22,80,000 = ₹ 1,20,000

b. Debentures were issued at a 20% premium:

In the books of Nupur Ltd.
Journal Entries
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
1.	Vandna Ltd. A/c  .....Dr.		22,80,000	-
	To 8% Debentures A/c		-	19,00,000
	To Securities Premium Reserve A/c		-	3,80,000
	(9,500 debentures of ₹200 each issued at 20% premium.)

Working Note:

1. Issue price = ₹ 200 + 20% = ₹ 240 per debenture
2. Number of debentures = ₹ 22,80,000 ÷ ₹ 240 = 9,500 debentures
3. Face value = 9,500 × ₹ 200 = ₹ 19,00,000
4. Premium = ₹ 3,80,000