R Ltd. purchased the assets of S Ltd. for ₹5,00,000. It also agreed to take over the liabilities of S Ltd. amounted to ₹ 2,00,000 for a purchase consideration of ₹2,80,000 . The payment of S Ltd. was made by issue of 9% Debentures of ₹ 100 each at par.
Pass necessary journal entries in the books of R Ltd.
Solution
Books of R Ltd.
Journal
|
Date |
Particulars |
L.F. |
Debit Amount Rs |
Credit Amount Rs |
|
|
|
Assets A/c |
Dr. |
|
5,00,000 |
|
|
|
To Liabilities A/c |
|
|
2,00,000 |
|
|
|
To S Ltd. |
|
|
2,80,000 |
|
|
|
To Capital Reserve A/c (balancing figure) |
|
|
20,000 |
|
|
|
(Asset purchased and liabilities took over from S Ltd.) |
|
|
|
|
|
|
|
|
|
|
|
|
|
S Ltd. |
Dr. |
|
2,80,000 |
|
|
|
To 9% Debentures A/c |
|
|
2,80,000 |
|
|
|
(Issued 2,800 9% Debentures of Rs 100 each) |
|
|
|
|
Working Note:
No.of.debentures to be issued =
`"Purchase Consideration" / "Issue Price"`
`= 280000/100 = 2800 "debentures"`
