Question 21:
Green Ltd. purchased the assets of Strong Ltd. for ` 40,00,000 and
took over liabilities of 7,00,000 at an agreed value of ` 32,40,000. Payment was made by issuing 10%
Debentures of 100 each at a discount of 10%. Pass the necessary Journal entries
in the books of Green Ltd.
Answer:
|
In the books of Green Ltd. Journal |
|||||
|
Date |
Particulars |
|
L.F. |
Debit |
Credit |
|
|
Sundry Assets A/c |
Dr. |
|
40,00,000 |
|
|
|
To Sundry Liabilities A/c |
|
|
|
7,00,000 |
|
|
To Strong Ltd. |
|
|
|
32,40,000 |
|
|
To Capital Reserve A/c |
|
|
|
60,000 |
|
|
(Being the purchase of business of Strong Ltd.) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Strong Ltd. A/c |
Dr. |
|
32,40,000 |
|
|
|
Discount on Issue of Debentures A/c (36,000×10) |
Dr. |
|
3,60,000 |
|
|
|
To 10% Debentures A/c |
|
|
|
36,00,000 |
|
|
(Being 36,000, 10% debentures issued as purchase
consideration) |
|
|
|
|
Working Notes:
Number of Debentures issued= (32,40,000/90) = 36,000 debentures
Question 22:
Wellbeing Ltd. took over assets of ` 9,80,000 and
liabilities of `
40,000 of HDR Ltd. at an agreed value of ` 9,00,000. Wellbeing Ltd. paid to HDR Ltd.
by issue of 9% Debentures of ` 100 each at a premium of 20%. Pass necessary Journal
entries to record the above transactions in the books of Wellbeing Ltd.
Answer:
|
In the books of Wellbeing Ltd. Journal |
|||||
|
Date |
Particulars |
|
L.F. |
Debit |
Credit |
|
|
Sundry Assets A/c |
Dr. |
|
9,80,000 |
|
|
|
To Sundry Liabilities A/c |
|
|
|
40,000 |
|
|
To HDR Ltd. |
|
|
|
9,00,000 |
|
|
To Capital Reserve A/c |
|
|
|
40,000 |
|
|
(Being the purchase of business of HDR Ltd.) |
|
|
|
|
|
|
|
|
|
|
|
|
|
HDR Ltd. A/c |
Dr. |
|
9,00,000 |
|
|
|
To 9% Debentures A/c (7,500 × 100) |
|
|
|
7,50,000 |
|
|
To Securities Premium Reserve A/c (7,500 × 20) |
|
|
|
1,50,000 |
|
|
(Being 36,000, 10% debentures issued as purchase
consideration) |
|
|
|
|
Working Notes:
Number of Debentures issued = (9,00,000/120) = 7,500
debentures
Question
23: Neeraj Ltd. took
over business of Ajay Enterprises on 1-04-2020. The details of the agreement
regarding the assets and liabilities to be taken over are:
|
Particulars |
(Book
Value) |
(Agreed
Value) |
|
Building |
20,00,000
|
35,00,000 |
|
Plant and Machinery |
12,00,0000
|
8,00,000 |
|
Stock |
4,00,000 |
4,00,000 |
|
Trade receivables |
5,00,000
|
4,00,000 |
|
Creditors |
2,00,000
|
3,00,000 |
|
Outstanding Expenses |
50,000
|
1,00,000 |
It
was decided to pay for purchase consideration as ` 7,00,000 through Cheque and balance by issue of
2,00,000, 9%
Debentures of 20 each at a premium of 25%. Journalise.
(CBSE Sample Paper 2020)
Answer:
|
Books of Neeraj Ltd. |
|||||
|
Journal |
|||||
|
Date |
Particular |
L.F. |
Debit ` |
Credit ` |
|
|
|
Building A/c Plant and Machinery A/c Stock A/c Trade receivables A/c |
Dr. Dr. Dr. Dr. |
|
35,00,000 8,00,000 4,00,000 4,00,000 |
|
|
|
To Creditors
A/c |
|
|
3,00,000 |
|
|
|
To
Outstanding Expenses A/c To Ajay Enterprises’s A/c |
|
|
1,00,000 47,00,000 |
|
|
|
|
|
|
|
|
|
|
(Being purchase of Business) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Ajay Enterprises’s
A/c Dr. |
|
47,00,000 |
|
|
|
|
To Bank A/c To 9%
Debentures A/c |
|
|
7,00,000 32,00,000 |
|
|
|
To
Securities Premium Reserve A/c |
|
|
8,00,000 |
|
|
|
(Being 12% 1,60,000 Debentures issued of ` 20 each at a premium of 25% at `25) |
|
|
|
|
|
|
|
|
|
||
Question 24:
Grown Ltd. issued 500, 10% Debentures of ` 1,000 each credited as fully paid-up to
the promoters for their services to incorporate the company. It also issued
100, 10% Debentures of ` 1,000 each credited as fully paid-up to the
underwriters towards their commission. Pass the Journal entries.
Answer:
|
In the books of Grown Ltd. Journal |
|||||
|
Date |
Particulars |
|
L.F. |
Debit |
Credit |
|
|
Incorporation Expenses A/c |
Dr. |
|
5,00,000 |
|
|
|
To Promoters A/c |
|
|
|
5,00,000 |
|
|
(Being amount due to promoters for their services) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Promoters A/c |
Dr. |
|
5,00,000 |
|
|
|
To 10% Debentures A/c (500 × 1,000) |
|
|
|
5,00,000 |
|
|
(Being 500, 10% debentures issued as purchase
consideration) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting Commission A/c |
Dr. |
|
1,00,000 |
|
|
|
To Underwriters A/c |
|
|
|
1,00,000 |
|
|
(Being amount due to underwriters for their services) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Underwriters A/c |
Dr. |
|
1,00,000 |
|
|
|
To 10% Debentures A/c (100 × 1,000) |
|
|
|
1,00,000 |
|
|
(Being 100, 10% debentures issued as purchase
consideration) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Statement of Profit and Loss A/c |
Dr. |
|
6,00,000 |
|
|
|
To Incorporation Expenses A/c |
|
|
|
5,00,000 |
|
|
To Underwriting Commission A/c |
|
|
|
1,00,000 |
|
|
(Being expenses transferred to statement of profit and
loss at the end of year) |
|
|
|
|
|
|
|
|
|
|
|
Question 25:
Bright Ltd. took over the assets of ` 6,60,000 and
liabilities of `
80,000 of Star Ltd. for an agreed purchase consideration of ` 6,00,000 payable 10% in cash and the
balance by the issue of 12% Debentures of ` 100 each. Give necessary Journal entries
in the books of Bright Ltd., assuming that:
Case (a): The debentures are issued at par.
Case (b): The debentures are issued at 20% premium.
Case (c): The debentures are issued at 10% discount.
Answer:
|
Books of Bright Ltd. |
|||||
|
Date |
Particulars |
L.F. |
Debit (`) |
Credit (`) |
|
|
|
Assets A/c |
Dr. |
|
6,60,000 |
|
|
|
Goodwill A/c(Balancing
Figure) |
Dr. |
|
20,000 |
|
|
|
To Liabilities A/c |
|
|
|
80,000 |
|
|
To Star Ltd. |
|
|
|
6,00,000 |
|
|
(Purchase of business of
Star Ltd.) |
|
|
|
|
|
|
|
|
|
60,000 |
|
|
|
Star Ltd. |
Dr. |
|
|
60,000 |
|
|
To Cash A/c |
|
|
|
|
|
|
(Payment made in cash) |
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
Star Ltd. |
Dr. |
|
5,40,000 |
|
|
|
To 12% Debentures
A/c |
|
|
|
5,40,000 |
|
|
( Purchase consideration
discharged by issue of 12% Debentures) |
|
|
|
|
|
|
|
|
|
|
|
|
(b) |
Star Ltd. |
Dr. |
|
5,40,000 |
|
|
|
To 12% Debentures
A/c |
|
|
|
4,50,000 |
|
|
To Security
Premium Reserve A/c |
|
|
|
90,000 |
|
|
( Purchase consideration
discharged by issue of 12% Debentures) |
|
|
|
|
|
|
|
|
|
|
|
|
(c) |
Star Ltd. |
Dr. |
|
5,40,000 |
|
|
|
Discount on Issue of
Debentures A/c |
Dr. |
|
60,000 |
|
|
|
To 12% Debentures
A/c |
|
|
|
6,00,000 |
|
|
( Purchase consideration
discharged by issue of 12% Debentures) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Working Note:
1) Number of Debentures to issued=5,40,000/120=4,500 Debentures
2) Number of Debentures to issued=5,40,000/90=6,000 Debentures
Click below for more Questions
Ts Grewal Solution 2022-2023
Class 12 / Volume – 2
Click on below links for
12th TS Grewal’s Accountancy Solutions