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12th | Company Accounts- Issue of Debentures| Question No.  16 To 20 | Ts Grewal Solution 2022-2023

Question 16:


Ananya Ltd . purchased an established business for  `  2,00,000 payable as  `  65,000 by cheque and the balance by issuing 9% Debentures of  `  100 each at a discount of 10%.
Give journal entries  in the books of Wye Ltd.

Answer:


Books of Ananya Ltd.   

Journal

Date

Particulars

L.F.

Debit

`

Credit

`

 

Sundry Assets A/c

Dr.

 

2,00,000

 

 

To Vendor A/c

 

 

2,00,000

 

(Business purchased)

 

 

 

 

 

 

 

 

 

Vendor A/c

Dr.

 

65,000

 

 

To Bank A/c

 

 

65,000

 

(Amount paid to Vendor in cash)

 

 

 

 

 

 

 

 

 

Vendor A/c

Dr.

 

1,35,000

 

 

Discount on Issue of Debentures A/c

Dr.

 

15,000

 

 

To 9% Debentures A/c

 

 

1,50,000

 

(Issued 1,500 debentures at 10% discount)

 

 

 

 

 

 

 

 

 

Working Note:

Number of debentute to be issued= Purchase consideration/issue price=1,35,000/90=1,500 Debentures

 

Question 17:


Reliance Ltd. purchased machinery costing  `  1,35,000 . It was agreed that the purchase consideration be paid by issuing 9% Debentures of  `  100 each . Assume debentures have been issued
(i) at par and
(ii)at a discount of 10%.
Give necessary journal entries.

Answer:


Case 1

Books of Reliance Ltd.

Journal

Date

Particulars

L.F.

Debit

`

Credit

`

 

Machinery A/c

Dr.

 

1,35,000

 

 

To Vendor A/c

 

 

1,35,000

 

(Machinery Purchases)

 

 

 

 

 

 

 

 

 

Vendor A/c

Dr.

 

1,35,000

 

 

To 9% Debenture A/c

 

 

1,35,000

 

(Issued 1,350 debentures at par)

 

 

 

 

 

 

 

 

Working Note:

Number of debentute to be issued= Purchase consideration/issue price =1,35,000/100=1,350 Debentures

 

Case 2

Journal

Date

Particulars

L.F.

Debit

`

Credit

`

 

Machinery A/c

Dr.

 

1,35,000

 

 

To Vendor A/c

 

 

1,35,000

 

(Machinery purchased)

 

 

 

 

 

 

 

 

 

Vendor A/c

Dr.

 

1,35,000

 

 

Discount on Issue of Debentures A/c

Dr.

 

15,000

 

 

To 9% Debenture A/c

 

 

1,50,000

 

(Issued 1,500 debentures at 10% discount)

 

 

 

 

 

 

 

 

 

Working Note:

Number of debentute to be issued= Purchase consideration/issue price =1,35,000/=1,500 Debentures

 

Question 18:


Romi Ltd. acquired assets of  `20 lakhs and took over creditors of  `2 lakhs from Kapil Enterprises.
Romi Ltd. issued 8% Debentures  of  
`100 each at a discount of 10% as purchase consideration.
Record necessary journal entries in the books of Romi Ltd.

Answer:


Books of Romi Ltd.

Journal

Date

Particulars

L.F.

Debit

`

Credit

`

 

Assets A/c

Dr.

 

20,00,000

 

 

To Creditors A/c

 

 

2,00,000

 

To Kapil Enterprises

 

 

18,00,000

 

(Assets purchased and Creditors took over from Kapil Enterprises)

 

 

 

 

 

 

 

 

 

Kapil Enterprises

Dr.

 

18,00,000

 

 

Discount on Issue of Debentures A/c

Dr.

 

2,00,000

 

 

To 8% Debentures A/c

 

 

20,00,000

 

(Issued 20,000 8% Debentures of ` 100 each at discount of 10% to Kapil Enterprises)

 

 

 

 

 

 

 

 

 

Working Note:

Number of debentute to be issued= Purchase consideration/issue price =18,00,000/100-10

=18,00,000/90=20,000 Debentures

 

Question 19:


Exe Ltd. purchased the assets of the book value  `4,00,000 and took over the liabilities of ` 50,000 from Mohan Bros. It was agreed that the  purchase consideration, settled at `3,80,000 be paid by issuing debentures of `100 each.
Pass journal entries if debenture are issued: 
(a) at par
(b) at a discount of 10% and
(c) at a premium of 10%.
It was agreed that any fraction of debentures be paid in cash.

 

Answer:


 

Journal

Date

Particulars

L.F.

Debit

`

Credit

`

 

Assets A/c

Dr.

 

4,00,000

 

 

Goodwill A/c (balancing figure)

Dr.

 

30,000

 

 

To Liabilities A/c

 

 

50,000

 

To Mohan Bros. A/c

 

 

3,80,000

 

(Asset and liabilities purchased from Mohan Bros.)

 

 

 

 

 

 

 

 

 

Case 1 When Debentures are issued at Par

Journal

Date

Particulars

L.F.

Debit

`

Credit

`

 

Mohan Bros.

Dr.

 

3,80,000

 

 

To Debenture A/c

 

 

3,80,000

 

(Issued 3,800 debentures at par)

 

 

 

 

 

 

 

 

Working Note:

Number of debentute to be issued= Purchase consideration/issue price =3,80,000/100 =3,800 Debentures

 

Case 2 When Debentures are issued at 10% discount

Journal

Date

Particulars

L.F.

Debit

`

Credit

`

 

Mohan Bros.

Dr.

 

3,80,000

 

 

Discount on issue of Debenture A/c

Dr.

 

42,220

 

 

To Debenture A/c

 

 

4,22,200

 

To Bank A/c

 

 

20

 

(Issued 4,222 Debentures of ` 100 each at 10% discount to Mohan Bros. and fraction of debentures is paid in cash)

 

 

 

 

 

 

 

 

 

Working Note:

Number of debentute to be issued= Purchase consideration/issue price =3,80,000/100-10

=18,00,000/90=4,222.2 Debentures

 

 

Case 3 When Debentures are issued at 10% premium

 

Journal

Date

Particulars

L.F.

Debit

`

Credit

`

 

Mohan Bros.

Dr.

 

3,80,000

 

 

To Debenture A/c

 

 

3,45,400

 

To Securities Premium A/c

 

 

34,540

 

To Bank A/c

 

 

60

 

(Issued 3,454 Debentures of ` 100 each at 10% premium to Mohan Bros. and fraction of debentures is paid in cash)

 

 

 

 

 

 

 

 

Working Note:

 

Number of debentute to be issued= Purchase consideration/issue price =3,80,000/100+10

=18,00,000/110=3454.6 Debentures

 

Question 20:   Rama Ltd. took over following assets and liabilities of Krishna Ltd. on 1st April, 2019:


 

`

Land and Building

50,00,000

Furniture

 10,00,000

Stock

5,00,000

Creditors

7,00,000

 

                   
The purchase consideration of
` 60,00,000 was paid by issuing 12% Debentures of ` 100 each at a premium of 20%.

Pass the necessary Journal entries for the above in the books of Rama Ltd. (CBSE 2020)

Answer:


Books of B Ltd.

Journal

Date

Particular

L.F.

Debit

`

Credit

`

 

Goodwill A/c

Land and Building A/c

Furniture A/c

Stock A/c

Dr.

Dr.

Dr.

Dr.

 

2,00,000

50,00,000

10,00,000

5,00,000

 

 

To Krishna Ltd.’s A/c

To Creditors A/c

 

 

60,00,000

7,00,000

 

(Being purchase of plant)

 

 

 

 

 

 

 

 

 

Krishna Ltd.’s A/c                                       Dr.

 

60,00,000

 

 

To 9% Debentures A/c

 

 

50,00,000

 

To Securities Premium Reserve A/c

 

 

10,00,000

 

(Being 12% 50,000 Debentures issued of ` 100 each at a premium of 20% to Vendors for purchase of plant costing ` 6,00,000 at `120)

 

 

 

 

 

 

 

 

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