Volume-2 | Chapter-2 | Question 21 to 25 | Issue of Debentures | Ts grewal solution 2020-21 | Class-12th

Page No 9.54:

Question 21:

R Ltd. purchased the assets of S Ltd. for `5,00,000. It also agreed to take over the liabilities of S Ltd. amounted to ` 2,00,000 for a purchase consideration of `2,80,000 . The payment of S Ltd. was made by issue of 9% Debentures of ` 100 each at par.
Pass necessary journal entries in the books of R Ltd.



Answer:

Books of R Ltd.

Journal

Date

Particulars

L.F.

Debit Amount

Rs

Credit Amount

Rs

 

Assets A/c

Dr.

 

5,00,000

 

 

To Liabilities A/c

 

 

2,00,000

 

To S Ltd.

 

 

2,80,000

 

To Capital Reserve A/c (balancing figure)

 

 

20,000

 

(Asset purchased and liabilities took over from S Ltd.)

 

 

 

 

 

 

 

 

 

S Ltd.

Dr.

 

2,80,000

 

 

To 9% Debentures A/c

 

 

2,80,000

 

(Issued 2,800 9% Debentures of Rs 100 each)

 

 

 

 

 

 

 

 

 

Working Note:

 

Number of debentute to be issued= Purchase consideration/issue price =2,80,000/100-10=28,000 Debentures



Page No 9.54:

Question 22:

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
Amount
(`)

Credit
Amount
(`)

 

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



Page No 9.54:

Question 23:

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
Amount
(`)

Credit
Amount
(`)

 

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



Page No 9.54:

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
Amount (`)

Credit
Amount (`)

 

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)

 

 

 

 

 

 

 

 

 

 


Page No 9.55:

Question 25:

'Sangam Woollens Ltd.', Ludhiana, are the manufacturers and exporters of woollen garments. The company decided to distribute free of cost woollen garments to 10 villages of Lahaul and Spiti District of Himachal Pradesh. The company also decided to employ 50 young persons from these villages in its newly established factory. The company issued 40,000 Equity Shares of ` 10 each and 1,000, 9% Debentures of ` 100 each to the vendor for the purchase of machinery of ` 5,00,000. Pass necessary Journal entries.



Answer:

In the books of Sangam Woollens Ltd.

Journal

Date

Particulars

 

L.F.

Debit
Amount
(`)

Credit
Amount
(`)

 

Machinery A/c

Dr.

 

5,00,000

 

 

  To Vendor A/c

 

 

 

5,00,000

 

(Being machinery purchased from a Vendor)

 

 

 

 

 

 

 

 

 

 

 

Vendor A/c

Dr.

 

5,00,000

 

 

  To Equity Share Capital A/c (40,000×10)

 

 

 

4,00,000

 

  To 9% Debentures A/c (1,000×100)

 

 

 

1,00,000

 

(Being equity shares and 9% Debentures issued as purchase consideration)

 

 

 

 

 

 

 

 

 

 

 


Click on Below link for more questions of Issue Of Debenture

From Question No. 1 to 5

From Question No. 6 to 10

From Question No. 11 to 15

From Question No. 16 to 20

From Question No. 21 to 25

From Question No. 26 to 30

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