Rama Ltd. took over the following assets and liabilities of Krishna Ltd. on 1st April, 2019:
Land and Building 50,00,000
Furniture 10,00,000
Stock 5,00,000
Creditors 7,00,000
The purchase consideration of Rs. 60,00,000 was paid by issuing
12% debentures of Rs.100 each at a premium of 20%.
Pass the necessary journal entries for the above in the books of Rama Ltd.
(b) On 1st April, 2018, Sakshi Ltd. issued 1,000, 11% Debentures of Rs. 100 each at a
discount of 6%, redeemable at a premium of 5% after three years. Pass the necessary journal
entries for the issue of debentures in the books of Sakshi Ltd.
Answers
Journal Entries for Ram ltd
Answer: Journal Entries
Land and building Acc. (Debit) 50,00,000
Furniture Acc. (Debit) 10,00,000
Stock Acc. (Debit) 5,00,000
Goodwill Acc. (Debit) 2,00,000
To Sundry Creditors Acc. (Credit) 7,00,000
To Krishna Acc. (Credit) 60,00,000
(Assets and liabilities taken over)
Krishna ltd. Acc. (Debit) 60,00,000
To 12% Debentures Acc. (Credit) 50,00,000
To Securities premium reserve Acc. (Credit) 10,00,000
(50,000,12% debntures of rs 100 each issued at premium of Rs.20)
(b)
Bank Acc. (Debit) 21,00,000
To Sundry Creditors Acc. (Credit) 21,00,000
(App. money received on 7,000, 10% dbeentures @ 300 each)
Debentures App. Acc. (Debit) 21,00,000
To 10% Debentures Acc. (Credit) 21,00,000
(Application money adjusted)
Debentures Allotment Acc. (Debit) 42,00,000
Loss on issue of debentures Acc. (Debit) 10,50,000
To 10% Debentures Acc. (Credit) 49,00,000
To Provision on redempion of Debentures Acc. (Credit) 3,50,000
(Allotment money due on 7,000,10% debentures)
Bank. Acc. (Debit) 42,00,000
To Debentures Allotment Acc. (Credit) 42,00,000
(Allotment money duly received)
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