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)