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 |
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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) |
|
|
|
|
|
|
|
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|
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 |
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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
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 |
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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
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 |
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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) |
|
|
|
|
|
|
|
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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 |
Credit |
|
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) |
|
|
|
|
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