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Question
Kuber Ltd. purchased assets worth ₹ 10,00,000 and took over liabilities of ₹ 1,00,000 of Amrit Ltd. for a purchase consideration of ₹ 8,00,000. Kuber Ltd. paid ₹ 2,60,000 through a cheque and the balance was settled by issuing 12% debentures of ₹ 100 each at a discount of 10%. Pass necessary journal entries in the books of Kuber Ltd. for the above transactions.
Solution
| In the Books of Kuber Limited Journal |
||||
| Date | Particulars | L.F. | Debit (₹) | Credit (₹) |
| Sundry Assets A/c ...Dr. | 10,00,000 | |||
| To Liabilities A/c | 1,00,000 | |||
| To Amrit Ltd. | 8,00,000 | |||
| To Capital Reserve Ale (Bal. Fig.) | 1,00,000 | |||
| (Being purchase of assets and liabilities of Amrit Ltd.) | ||||
| Amrit Ltd. ...Dr. | 2,60,000 | |||
| To Bank A/c | 2,60,000 | |||
| (Being ₹ 2,60,000 paid to Amrit Ltd. through cheque) | ||||
| Amrit Ltd. ...Dr. | 5,40,000 | |||
| Discount on Issue of Debentures A/c ...Dr. | 60,000 | |||
| To 12% Debentures A/c | 6,00,000 | |||
| (Being remaining amount of purchase consideration discharged by issue of 6,000, 12% Debentures of 100 each at a discount of 10%) | ||||
Working Notes:
Amount paid by cheque = ₹ 2,60,000
Remaining Amouts to be paid by Issue of Debentures = ₹ 8,00,000 - ₹ 2,60,000
= ₹ 5,40,000
Number of Debentures Issued = `(₹ 5,40,000)/ (₹ 100-₹ 10)`
= `(₹ 5,40,000)/ ₹ 90`= 6,000
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