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
