Question

Illustration 15.
Lemon Tree Ltd. purchased a piece of land from JSS Ltd. and paid the consideration as follows:
(i) Issued a cheque for 10,00,000;
(ii) Issued a Bill of Exchange for 3 months for 5,00,000;
(iii) Issued 5,000; 9% Debentures of 100 each at par redeemable at 10% premium after 5 years.
Pass the Journal entry.​

Answer 1

cost of land = 10,00,000 + 5,00,000 + (5000×100) 5,00,000 = 20,00,000.

land.... dr. 20,00,000

to JSS ltd 20,00,000

JSS Ltd. 20,00,000

loss on issue of debenture 50,000

to bank account 10,00,000

to bills payable 5,00,000

to 9% debenture 5,00,000

to premium on redemption 50,000