Bharat Limited purchased plant and machinery for 20,00,000 rupees from Delhi
machines limited by paying 5,00,000 Rupees by cheque and balance by issue of 11%
debentures of rupees 100 each at a premium of 20%. Pass necessary entry in the books
of Bharat Ltd. for the above transactions. Pass necessary entries in the books of Bharat
Limited for the above transatransaction
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A journal entry is a business transaction record in the firm's accounting books.
The correct journal entries are -
- Plant & machinery A/c Dr 20,00,000
To Delhi Machine Ltd. A/c 20,00,000
( Being the plant and machinery purchased)
- Delhi Machine Ltd A/c Dr 5,00,000
To Bank A/c 5,00,000
( Being 5,00,000 given by cheque)
- Delhi Machine Ltd A/c Dr 15,00,000
To 11% Debenture A/c 12,50,000
To Securities premium A/c 2,50,000
( Being remaining payment made by issue of debentures)
Calculation -
Number of Debenture = Purchase Price/ Issue price
= 15,00,000 / [100 + 20]
= 15,00,000/120
= 12,500
Number of Debenture = 12,500
Debentures @ 11% = = 12,500 × 100 = 12,50,000
Securities premium @ 20% = 12,500 × 20 = 2,50,000
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