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Question
Vedesh Ltd. purchased a running business of Vibhu Enterprises for a sum of ₹ 12,00,000. Vedesh Ltd. paid ₹ 60,000 by drawing a promissory note in favour of Vibhu Enterprises., ₹1,90,000 through bank draft and balance by issue of 8% debentures of ₹ 100 each at a discount of 5%. The assets and liabilities of Vibhu Enterprises consisted of Fixed Assets valued at ₹ 17,30,000 and Trade Payables at ₹ 3,20,000. You are required to pass necessary journal entries in the books of Vedesh Ltd.
Solution
| In the Books of Vedesh Ltd. Journal | ||||
| Date | Particulars | L.F. | Dr. Amount (₹) | Cr. Amount (₹) |
| Fixed Assets A/c Dr. | 17,30,000 | |||
| To Trade Payables A/c | 3,20,000 | |||
| To Vibhu Enterprises | 12,00,000 | |||
|
To Capital Reserve A/c |
2,10,000 | |||
| Vibhu Enterprises Dr. | 12,00,000 | |||
| Discount on Issue of Debentures A/c Dr. | 50,000 | |||
| To Bills Payable A/c | 60,000 | |||
| To Bank A/c | 1,90,000 | |||
|
To 8% Debentures A/c (Being issue of bank draft, acceptance of bill and issue of 8% debentures in settlement of purchase consideration} |
10,00,000 | |||
Working Note:
Number of Debentures issued
= `(9,50,000)/95`
= 10,000
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