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Question
Radhey Ltd. took over assets of ₹ 14,00,000 and liabilities of ₹ 6,00,000 of Krishna Ltd. Radhey Ltd. paid the purchase consideration by issuing 10,000, 8% Debentures of 100 each at a premium of 10%.
Pass necessary journal entries in the books of Radhey Ltd.
Solution
| In the books of Radhey Ltd. Journal Entries |
||||
| Date | Particular | L.F. | Amount Dr. (₹) |
Amount Cr (₹) |
| 1. | Assets A/c ...Dr. | 14,00,000 | - | |
| Goodwill A/c (Bal. fig.) ...Dr. | 3,00,000 | - | ||
| To Liabilities A/c | - | 6,00,000 | ||
| To Krishna Ltd. | - | 11,00,000 | ||
| (Being business of Krishna Ltd. taken over) | ||||
| 2. | Krishna Ltd. ...Dr. | 11,00,000 | - | |
| To 8% Debentures A/c | - | 10,00,000 | ||
| To Securities Premium Reserve A/c | - | 1,00,000 | ||
| (Being purchase consideration paid by issue of 8% debentures) |
||||
Working Note:
Calculation of amount of purchase consideration
= ₹ 10,00,000 (Nominal value of deb.) + 1,00,000 (Premium)
= ₹ 11,00,000
Amount of Goodwill = (Liabilities + Purchase consideration) − Assets
= (₹ 6,00,000 + ₹ 11,00,000) − ₹ 14,00,000
= ₹ 17,00,000 − ₹ 14,00,000
= ₹ 3,00,000
RELATED QUESTIONS
On 1st April, 2012; Vivek Ltd. Was formed with an authorized capital of Rs.1,00,00,000 divided into 2,00,000 equity shares of Rs.50 each. The company issued prospectus inviting applications for 1,80,000 shares. The issue price was payable as under:
On Application: Rs.15
On Allotment: Rs.20
On Call: Balance amount
The issue was fully subscribed and the company allotted shares to all the applicants. The company did not make the call during the year.
Show the following:
a. Share capital in the Balance Sheet of the company as per revised Schedule-VI, Part-I of the Companies Act, 1956.
b. Also prepare 'Notes to Accounts' for the same.
Y Ltd. forteited 100 equity shares of Rs 10 each for the non-payment of first call of Rs 2 per share. The final call of Rs 2 per share was yet to be made.
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The liability of shareholder in Joint Stock Company is _________.
Give one word/term/phrase for the following statement.
The shares on which dividend is not fixed.
State whether you agree or disagree with following statement:
The Authorised capital is also known as Nominal Capital.
Answer in one sentence only.
What is Paid-up Capital?
__________ form of business organisation in which Capital is raised through the issue of shares.
___________ Capital is the part of issued capital which is subscribed by the public.
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₹ 2 on Application
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Pass Journal Entries in the books of a company.
Sucheta Company Limited issued ₹ 20,00,000 new capital divided into ₹ 100 equity shares at a Premium of ₹ 20 per share payable as ₹ 10 on Application ₹ 40 on Allotment and ₹ 10 premium ₹ 50 on Final call and ₹ 10 premium.
The issue was oversubscribed to the extent of 26000 equity shares. The applicants on 2000 shares were sent letter of regret and their application money was refunded. Remaining applicants were alloted share on pro-rata basis. All the money due on Allotment and Final call was duly received.
Make necessary Journal entries in the books of Sucheta Company Ltd.
Net Assets minus Capital Reserve is ______.
Pass necessary journal entries in the books of Z Ltd. for the following transaction:
The company has a balance of ₹ 60,000 in securities premium reserve account. Loss on issue of debentures ₹ 1,00,000 was written off as per the provisions of the Companies Act. 2013.
Narmada Ltd. has an authorised capital of ₹ 10,00,000 divided into equity shares of ₹ 10 each. The company issued a prospectus inviting applications for issuing 80,000 equity shares. The company received applications for 75,000 equity shares. All calls were made and were duly received except the first and final call of ₹ 2 per share on 5,000 shares held by Arti. These shares were forfeited.
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- Also prepare 'Notes to Accounts' for the same.
Find the odd one:
Akasha Company Limited issued 25,000 equity shares of ~ 10 each payable as follows:
| On Application | ₹ 2 |
| On Allotment | ₹ 2 |
| On First call | ₹ 3 |
| On Final call | ₹ 3 |
Applications were received for 24,000 equity shares and allotment of shares were made to them. All money was received by the company.
Pass Journal Entries in the books of Akasha Company Limited.
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