Question 21:
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:
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Journal |
|||||
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Date |
Particulars |
L.F. |
Debit ` |
Credit ` |
|
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|
Assets
A/c |
Dr. |
|
4,00,000 |
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Goodwill
A/c (balancing figure) |
Dr. |
|
30,000 |
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To Liabilities A/c |
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|
50,000 |
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To Mohan Bros. A/c |
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|
3,80,000 |
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(Asset
and liabilities purchased from Mohan Bros.) |
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Case 1When Debentures are issued at Par
|
Journal |
|||||
|
Date |
Particulars |
L.F. |
Debit ` |
Credit ` |
|
|
|
Mohan
Bros. |
Dr. |
|
3,80,000 |
|
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To Debenture A/c |
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|
3,80,000 |
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(Issued
3,800 debentures at par) |
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Working Note:
Number of debentute to be issued= Purchase
consideration/issue price =3,80,000/100 =3,800 Debentures
Case 2When Debentures are issued at 10% discount
|
Journal |
|||||
|
Date |
Particulars |
L.F. |
Debit ` |
Credit ` |
|
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|
Mohan
Bros. |
Dr. |
|
3,80,000 |
|
|
|
Discount
on issue of Debenture A/c |
Dr. |
|
42,220 |
|
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To Debenture A/c |
|
|
4,22,200 |
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To Bank A/c |
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|
20 |
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|
(Issued
4,222 Debentures of ` 100 each at 10% discount to Mohan Bros. and
fraction of debentures is paid in cash) |
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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 3When
Debentures are issued at 10% premium
|
Journal |
|||||
|
Date |
Particulars |
L.F. |
Debit ` |
Credit ` |
|
|
|
Mohan
Bros. |
Dr. |
|
3,80,000 |
|
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To Debenture A/c |
|
|
3,45,400 |
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To Securities Premium
A/c |
|
|
34,540 |
|
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To Bank A/c |
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|
60 |
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|
(Issued
3,454 Debentures of ` 100 each at 10% premium to Mohan Bros. and fraction
of debentures is paid in cash) |
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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 22:
Rama Ltd. took over following assets and liabilities of Krishna Ltd. on 1st
April, 2019:
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|
` |
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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:
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Books of B Ltd. |
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|
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 |
|
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To Krishna Ltd.’s A/c To Creditors A/c |
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|
60,00,000 7,00,000 |
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(Being
purchase of plant) |
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Krishna Ltd.’s A/c Dr. |
|
60,00,000 |
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To 9% Debentures A/c |
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|
50,00,000 |
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To Securities Premium
Reserve A/c |
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|
10,00,000 |
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(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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Question 23:
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:
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In the books of Green Ltd. Journal |
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Date |
Particulars |
|
L.F. |
Debit |
Credit |
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|
Sundry Assets A/c |
Dr. |
|
40,00,000 |
|
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To Sundry Liabilities A/c |
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|
7,00,000 |
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To Strong Ltd. |
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32,40,000 |
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To Capital Reserve A/c |
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|
60,000 |
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(Being the purchase of business of
Strong Ltd.) |
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Strong Ltd. A/c |
Dr. |
|
32,40,000 |
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Discount on Issue of Debentures
A/c (36,000×10) |
Dr. |
|
3,60,000 |
|
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To 10% Debentures A/c |
|
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|
36,00,000 |
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(Being 36,000, 10% debentures
issued as purchase consideration) |
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Working Notes:
Number of Debentures issued= (32,40,000/90) = 36,000 debentures
Question 24:
Anthony Ltd. issued
20,000, 9% Debentures of `100 each at 10% discOunt to Mithoo Ltd. from whom
Assets of `23,50,000
and Liabilities of `6,00,000 were
taken over. Pass entries in the books of Anthony Ltd., if these debentures were
to be redeemed at 5% premium. (CBSE Sample Paper 2023)
Answer:
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Books of Anthony Ltd. |
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Journal |
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Date |
Particular |
L.F. |
Debit ` |
Credit ` |
|
|
|
Goodwill
A/c |
Dr. |
|
50,000 |
|
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Assets
A/c |
23,50,000 |
||||
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To Mithoo
Ltd.’s A/c |
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|
18,00,000 |
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To Liabilities A/c |
6,00,000 |
||||
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(Being
purchase of plant) |
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Krishna Ltd.’s A/c Dr. |
|
18,00,000 |
|
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Loss
on Issue of debenture A/c
Dr. |
|
2,00,000 |
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Discount
on Issue of debenture A/c
Dr. |
1,00,000 |
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To 9% Debentures A/c |
20,00,000 |
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To Premium on
redemption of debenture A/c |
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1,00,000 |
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(Being
9% 20,000 Debentures issued of `100 each at a Discount of 9% to Vendors for taking over of assets
costing ` 23,50,000 and liabilities of ` 6,00,000 redeemable at 5% Premium) |
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Question
25: 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. |
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|
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 |
|
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To Creditors A/c |
|
|
3,00,000 |
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To Outstanding Expenses
A/c To Ajay Enterprises’s A/c |
|
|
1,00,000 47,00,000 |
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(Being
purchase of Business) |
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Ajay Enterprises’s A/c Dr. |
|
47,00,000 |
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To Bank A/c To 9% Debentures A/c |
|
|
7,00,000 32,00,000 |
|
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To Securities Premium
Reserve A/c |
|
|
8,00,000 |
|
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(Being
12% 1,60,000 Debentures issued of ` 20 each at a premium of 25% at `25) |
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Ts Grewal Solution 2024-2025
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Class 12 / Volume – 2