Question

X Ltd. issued 25,000, 9% Debentures of ₹ 100 each at a premium of ₹ 4 per debenture on 1st April, 2024. On the same date, it purchased assets of ₹ 10,00,000 and took over liabilities of ₹ 70,000 of Y Ltd. and paid ₹ 4,00,000 in Cash and remaining by issue of ₹ 5,00,000, 9% debentures at a premium of 6%. On the same date, it took a loan from the Bank for ₹ 6,00,000 and issued 9% debentures as collateral security. Give entries and the extract of balance sheet on 31st March, 2025. Ignore interest.

Answer 1

Journal for X Ltd.
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
1.	Bank A/c (25000 × 104)   ...Dr.		26,00,000	-
	To Debenture Application & Allotment A/c		-	26,00,000
	(Being application money received.)
2.	Debenture Application & Allotment A/c   ...Dr.		26,00,000	-
	To 9% Debenture A/c (25,000 × 100)		-	25,00,000
	To Securities Premium A/c (25,000 × 4)		-	1,00,000
	(Being application money transfer to Debenture A/c.)
3.	Property, Plant and Equipment    ...Dr.		10,00,000	-
	To Current Liabilities A/c		-	70,000
	To Y Ltd.		-	9,30,000
	(Being business purchased of Y Ltd.)
4.	Y Ltd.   ...Dr.		9,30,000	-
	To Bank A/c		-	4,00,000
	To 9% Debentures A/c		-	5,00,000
	To Securities Premium		-	30,000
	(Being part payment made in cash to Y Ltd.)
5.	Bank A/c   ...Dr.		6,00,000	-
	To Bank Loan A/c		-	6,00,000
	(Being loan taken from bank.)
6.	9% Debenture A/c   ...Dr.		6,00,000	-
	To 9% Debenture Suspense  A/c		-	6,00,000
	(Being issue of 6,000, 9% debenture of ₹100 each as Collateral Security for a Loan taken from bank.)

 

Balance Sheet on 31st March, 2025.
Particulars	Note No.	Amount (₹)
I. Equity and Liabilities
1. Non-Current Liabilities
(a) Long-term Borrowings	1	36,00,000
2. Current Liabilities
(a) Short-term Provisions		70,000
II. ASSETS
1. Non-Current Assets
Property, Plant and Equipment
2. Current Assets
Cash and Cash Equivalents		28,00,000

Working Note:

	Particulars	Amount (₹)
1.	9% Debentures (secured by floating charge)	30,00,000
	Securities Premium (100,000 + 30,000)	6,00,000
Total		36,00,000