A Ltd purchased a running business from B Ltd for sum of 1,50,000 payable by issue of 10,000 equity shares of rs 10 each at a premium of rs2 per share and balance in cash. the asses and liabilies taken over were plant:40,000,building :40,000, stock:50,000,furniture:20,000,debtors :20,000,creditors:30,000. you are required to pass necessary journal entries for above transactions in the book of A Ltd
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net assets = assets - liabilities
= (40,000 + 40,000 + 50,000 + 20,000 + 20,000) - 30,000
= 1,40,000
purchase consideration = 1,50,000
goodwill = 1,50,000 - 1,40,000 = 10,000
plant..... dr 40,000
building... dr 40,000
stock..... dr 50,000
furniture... dr 20,000
debtors..... dr 20,000
goodwill... dr 10,000
to creditors 30,000
to B ltd. 1,50,000
b Ltd. dr. 1,50,000
to equity share capital 1,00,000
to security premium reserve 20,000
to cash 30,000
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