Hero Ltd. Purchased Plant and Machinery for ₹ 18,00,000 from Pearl Machines Ltd. Payable ₹ 3,00,000 by Drawing a Promissory Note and the Balance by Issue of 9% Debentures of ₹ 100 Each at a Premium - Accountancy

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Journal Entry

Hero Ltd. purchased plant and machinery for ₹ 18,00,000 from Pearl Machines Ltd. payable ₹ 3,00,000 by drawing a promissory note and the balance by the issue of 9% debentures of ₹ 100 each at a premium of 20%.
Pass the necessary journal entries in the books of Hero Ltd. for the above transactions.

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Solution

In the books of Hero Ltd. 
Journal 

Date Particulars   L.F.

Debit

Amount(₹)

Credit

Amount(₹)

  Plant & Machinery A/c Dr.











18,00,000

 



To Pearl Ltd.  

 

18,00,000

(Being Plant & Machinery purchased)  

 

 

     

 

 

  Pearl Ltd. A/c Dr.

3,00,000

 



To Bills Payable A/c  

 

3,00,000

(Being consideration partly paid by issuing promissory note)  

 

 

     

 

 

  Pearl Ltd. A/c Dr.

15,00,000

 




To 9% Debenture A/c  

 

12,50,000

To Security Premium Reserve A/c

 

 

2,50,000

(Being 12,500 Debentures (15,00,000/120) of Rs 100 each issued to Hero Ltd. At premium of 20%)  

 

 

Concept: Issue of Debentures at Par at Premium and at Discount
  Is there an error in this question or solution?
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