Question

Z Ltd. purchased machinery from K Ltd. Z Ltd. paid K Ltd as follows:
(i) By issuing 5,000 equity shares of Rs 10 each at a premium of 30%.
(ii) By issuing 1000, 8% Debentures of Rs 100 each at a discount of 10%.
(iii) Balance by giving a promissory note of Rs 48,000 payable after two months.

Pass necessary journal entries for the purchase of machinery and payment to K Ltd. in the books of Z Ltd.

Answer 1

Journal In the books of Z Ltd.
Date	Particulars		L.F.	Debit Amount (Rs)	Credit Amount (Rs)
	Machinery A/c	Dr.		2,03,000
	To K Ltd.				2,03,000
	(Purchased machinery from K Ltd.)
	K Ltd. (65,000 + 90,000 + 48,000)	Dr.		2,03,000
	Discount on Issue of Debentures A/c (1,000 × 10)	Dr.		10,000
	To Equity Share Capital A/c (5,000 × 10)				50,000
	To Securities Premium A/c (5,000 × 3)				15,000
	To 8% Debentures A/c (1,000 × 100)				1,00,000
	To Bills Payable A/c				48,000
	(Issued 5,000 equity shares of Rs 10 each at a premium of 30%, issued 1,000 8% Debentures of Rs 100 each at a discount of 10% and balance by issuing a promissory note)