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Green Ltd. Purchased the Assets of Strong Ltd. for ₹ 40,00,000 and Took Over Liabilities of 7,00,000 at an Agreed Value of ₹ 32,40,000. - Accountancy

Journal Entry

Green Ltd. purchased the assets of Strong Ltd. for ₹ 40,00,000 and took over liabilities of 7,00,000 at an agreed value of ₹ 32,40,000. Payment was made by issuing 10% Debentures of 100 each at a discount of 10%. Pass the necessary Journal entries in the books of Green Ltd.

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Solution

In the books of Green Ltd.
Journal

Date

Particulars

 

L.F.

Debit
Amount
(₹)

Credit
Amount
(₹)

 

Sundry Assets A/c

Dr.

 

40,00,000

 

 

  To Sundry Liabilities A/c

 

 

 

7,00,000

 

  To Strong Ltd.

 

 

 

32,40,000

 

  To Capital Reserve A/c

 

 

 

60,000

 

(Being the purchase of business of Strong Ltd.)

 

 

 

 

 

 

 

 

 

 

 

Strong Ltd. A/c

Dr.

 

32,40,000

 

 

Discount on Issue of Debentures A/c (36,000×10)

Dr.

 

3,60,000

 

 

  To 10% Debentures A/c

 

 

 

36,00,000

 

(Being 36,000, 10% debentures issued as purchase consideration)        

Working Notes:
Number of Debentures issued= (32,40,000/90) = 36,000 debentures.

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

TS Grewal Class 12 Accountancy - Double Entry Book Keeping Volume 2
Chapter 2 Issue of Debentures
Exercise | Q 24 | Page 54
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