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# K Ltd. Took Over the Assets of Rs.15,00,000 and Liabilities of Rs.5,00,000 of P Ltd. for a Purchase Consideration of Rs.13,68,500. Rs.25,500 Were Paid by Issuing a Promissory Note in Favour of P Ltd. - CBSE (Arts) Class 12 - Accountancy

ConceptIssue at Par and Premium and at Discount

#### Question

K Ltd. took over the assets of Rs.15,00,000 and liabilities of Rs.5,00,000 of P Ltd. For a purchase consideration of Rs.13,68,500. Rs.25,500 were paid by issuing a promissory note in favour of P Ltd. Payable after two months and the balances was paid by issue of equity shares of Rs.100 each at a premium of 25%.

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

#### Solution

Journal

 Date Particulars L.F. Dr. (Rs.) Cr. (Rs.) (i)           (ii) Sundry Assets A/c                                                                                                                Dr Goodwill A/c                                                                                                                         Dr              To Sundry Liabilities A/c              To P Ltd (Being assets and liabilities purchased of P Ltd)   P Ltd                                                                                                                                    Dr         To Equity Share Capital A/c         To Securities Premium A/c         To Bills Payable A/c (Being 10,744 Equity Shares issued of Rs.100 each at a premium of Rs.25 per share and a promissory note of 25,500) 15,00,000 3,68,500         13,68,500 5,00,000 13,68,500       10,74,400 2,68,600 25,500

Working Notes :

WN 1: Calculation of Number of Equity Shares

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

=1343000/125

= 10,744 equity shares

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Solution K Ltd. Took Over the Assets of Rs.15,00,000 and Liabilities of Rs.5,00,000 of P Ltd. for a Purchase Consideration of Rs.13,68,500. Rs.25,500 Were Paid by Issuing a Promissory Note in Favour of P Ltd. Concept: Issue at Par and Premium and at Discount.
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