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Question
On 1st April, 2023, Ruth Ltd. purchased Plant and Machinery for ₹ 11,00,000 from Pablo Ltd. payable as to ₹ 1,00,000 by accepting a promissory note and the balance by an issue of 11% Debentures of ₹ 100 each at a premium of 10% to be redeemed at a premium of 2 % after six years. You are required to pass journal entries in the books of Ruth Ltd. only to record the payment made to Pablo Ltd.
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Solution
| In the Books of Ruth Ltd. | ||||
| Journal Entries | ||||
| Date | Particulars | L.F. | Debit (₹) | Credit (₹) |
| 1. | Pablo Ltd. A/c ...Dr. | 1,00,000 | - | |
| To Bills Payable A/c | - | 1,00,000 | ||
| (Being part payment made by accepting a bill of exchange) | ||||
| 2. | Pablo Ltd. A/c ...Dr. | 10,00,000 | - | |
| Loss on issue of Debentures A/c ...Dr. | 18,180 | - | ||
| To 11% Debentures A/c | - | 9,09,000 | ||
| To Securities Premium A/c | - | 90,900 | ||
| To Premium on Redemption of Debentures A/c | - | 18,180 | ||
| To Bank A/c | - | 100 | ||
| (Being 9,090, 11% Debentures issued at a premium of 10%) | ||||
Working Notes:
No. of Debentures = `(10,00,000)/110` = 9090.9090
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'Ananya Ltd' had an authorized capital of Rs 10,00,00,000 divided into 10,00,000 equity shares of Rs 100 each. The company had already issued 2,00,000 shares. The dividend paid per share for the year ended 31.3.2007 was Rs 30. The management decided to export its products to African countries. To meet the requirements of additional funds, the finance manager put up the following three alternate proposals before the Board of Directors:
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| III | 10,00,000 |
| IV | 20,00,000 |
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