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B.Ltd. Purchased Assets of the Book Value of Rs 4,00,000 and Took Over the Liability of Rs 50,000 from Mohan Bros. - Accountancy

Numerical

B.Ltd. purchased assets of the book value of Rs 4,00,000 and took over the liability of Rs 50,000 from Mohan Bros. It was agreed that the purchase consideration, settled at Rs,3,80,000, be paid by issuing debentures of Rs 100 each.

What Journal entries will be made in the following three cases, if debentures are issued: (a) at par; (b) at discount; (c) at premium of 10%? It was agreed that any fraction of debentures be paid in cash.

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Solution

Case (a)

Book of B. Ltd.

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

Sundry Assets A/c

Dr.

 

4,00,000

 

 

Goodwill A/c

Dr.

 

30,000

 

 

 

To Sundry Liabilities A/c

 

 

50,000

 

 

To Mohan Bros.

 

 

3,80,000

 

(Assets and liabilities of Mohan Bros. taken over)

 

 

 

 

Mohan Bros.

Dr.

 

3,80,000

 

 

 

To Debenture A/c

 

 

3,80,000

 

(3,800 debentures of 100 each issued to Mohan Bros. in

consideration of assets and liabilities)

 

 

 

Case (b)

Sundry Assets A/c

Dr.

 

4,00,000

 

 

 

Goodwill A/c

Dr.

 

30,000

 

 

 

To Sundry Liabilities A/c

 

 

50,000

 

 

To Mohan Bros.

 

 

3,80,000

 

(Assets and liabilities of Mohan Bros. taken over)

 

 

 

 

Mohan Bros.

Dr.

 

3,80,000

 

 

Discount on Issue of Debenture A/c

Dr.

 

42,222

 

 

 

To Debenture A/c

 

 

4,22,200

 

 

To Bank A/c

 

 

22

 

(Issued 4,222 debentures of Rs 100 each at 10% discount

and balance paid in cash)

 

 

 

Case (c)

Sundry Assets A/c

Dr.

 

4,00,000

 

 

 

Goodwill A/c

Dr.

 

30,000

 

 

 

To Sundry Liabilities A/c

 

 

50,000

 

 

To Mohan Bros.

 

 

3,80,000

 

(Assets and liabilities of Mohan Bros. taken over)

 

 

 

 

Mohan Bros

Dr.

 

3,80,000

 

 

 

To Debentures A/c

 

 

3,45,400

 

 

To Securities Premium A/c

 

 

34,540

 

 

To Bank A/c

 

 

60

 

(Issued of 3,454 debentures at 10% premium and balance

paid in cash)

 

 

 

  Is there an error in this question or solution?
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APPEARS IN

NCERT Class 12 Accountancy - Company Accounts and Analysis of Financial Statements
Chapter 2 Issue and Redemption of Debentures
Numerical Questions | Q 10 | Page 136
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