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 transactions.
Answers
Answer:
Plant & machinery a/c Dr 2000000
To Bharat 2000000
Bharat Dr 2000000
To Bank a/c 500000
To 11% Debenture a/c 1250000 ( 12500 × 100 )
To securities premium reserve a/c 250000 (12500 × 20 )
calculation of debentures issued ;---
= 2000000-500000/120 per debenture
= 12500 debentures.
Journal entry
Explanation:
Books of Bharat Limited
Journal entry
Date Particular Debit Credit
Plant & machinery A/c Dr 20,00,000
To Bank A/c 5,00,000
To 11% Debenture A/c 12,50,000
To Securities premium A/c 2,50,000
(Being Plant & machinery purchased)
Working note:
Remain amount = 20,00,000 - 5,00,000
Remain amount = 15,00,000
Number of Debenture = 15,00,000 / [100 + 20]
Number of Debenture = 12,500
Amount of 11% Debenture = 12,500 × 100 = 12,50,000
Amount of Securities premium = 12,500 × 20 = 2,50,000
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