Question

Buddha Limited took over assets of ₹ 40,00,000 and liabilities of ₹ 6,50,000 of Ginny Limited. Buddha Limited issued 30,000, 8% Debentures of ₹ 100 each at 10% discount, to be redeemed at 5% premium along with cheque of ₹ 5,00,000. Pass necessary journal entries in the books of Buddha Ltd.

Answer 1

Journal Entries
Date	Particulars	Debit	Credit
1.	Assets A/c     ...Dr.	40,00,000
	To Liabilities A/c		6,50,000
	To Ginny Ltd. A/c		32,00,000
	To Capital Reserve A/c		1,50,000
	(Being Business taken over and capital reserve recorded)
2.	Ginny Limited A/c     ...Dr.	32,00,000
	Loss on Issue of Debentures A/c     ...Dr.	4,50,000
	To 8% Debentures A/c		30,00,000
	To Premium on redemption of Debentures		1,50,000
	To Bank A/c		5,00,000
	(Being purchased consideration discharged)