Question

Pass necessary journal entries for the following transactions in the books of Sewak Ltd.:

(i) Sewak Ltd. acquired assets of Rs 5,00,000 and liabilities of Rs 3,00,000 of Goodwill Ltd. for a purchase consideration of Rs 1,35,000. Payment to Goodwill Ltd. was made by issuing equity shares of 10 each at a discount of 10%.

(ii) Purchase furniture of Rs 5,00,000 from Ramprastha Ltd. The payment to Ramprastha Ltd. was made by issuing equity shares of Rs 10 each at a premium of 25%.

Answer 1

Sewak Ltd.
Journal
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
(i)	Assets A/c	Dr.		5,00,000
	To Liabilities A/c				3,00,000
	To Capital Reserve (Balancing Figure)				65,000
	To Goodwill Ltd.				1,35,000
	(Business of Goodwill Ltd. purchased)
	Goodwill Ltd. A/c	Dr.		1,35,000
	Discount on Issue of Shares A/c	Dr.		15,000
	To Equity Share Capital A/c				1,50,000
	(Goodwill Ltd. was paid through 15,000 shares of Rs 10 each at 10% discount)

Number of Shares to be issued=`"Amount Payble"/"Issue Price"=(1,35,000)/(10-1)=15,000` 

Sewak Ltd.
Journal
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
(ii)	Furniture A/c	Dr.		5,00,000
	To Ramprastha Ltd.				5,00,000
	(Furniture purchased from Ramprastha Ltd.)
	Ramprastha Ltd.	Dr.		5,00,000
	To Equity Share Capital A/c				4,00,000
	To Securities Premium A/c				1,00,000
	(Ramprastha Ltd was paid through issue of 40,000 equity shares of Rs 10 each at premium of 25%)