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Question
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%) |
|
|
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