Question

B' Ltd. took over the assets of Rs.14,00,000 and liabilities of Rs.4,00,000 of C Ltd. for a purchase consideration of Rs.9,19,000. Rs.17,000 were paid by a bank draft in favour of C Ltd. and the balance was paid by issue of equity shares of Rs.10 each at a premium of 10% in favour of C Ltd.

Pass necessary journal entries for the above transactions in the books of B Ltd.

Answer 1

                                                                        Journal

Date	Particulars	L.F.	Dr. (Rs)	Cr. (Rs)
(i)           (ii)	Sundry Assets A/c                                                                   Dr               To Sundry Liabilities A/c                To C Ltd                To Capital Reserve A/c (Being assets and liabilities purchased of C Ltd)   C Ltd                                                                                      Dr                 To Equity Share Capital A/c                 To Securities Premium A/c                 To Bank A/c (Being 82,000 equity shares issued of Rs.10 each at a premium of Rs.1 per share and Rs.17,000 by bank draft)		14,00,000           9,19,000	4,00,000 9,19,000 81,000       8,20,000 82,000 17,000

Working Notes:

WN1 : Calculation of Number of Equity Shares

`"Number of Shares Issued =""Purchase Consideration"/"Issue Price"`

                                     `=(9,02,000)/11=82,000" equity shares"`