Question

Venus Ltd., is a real estate company. To discharge its corporate Social Responsibility, it decided to construct a night shelter for the homeless. The company took over assets of ` 10,00,000 and liabilities of ` 1,80,000 of Cayns Ltd. for ` 7,60,000. Venus Ltd.. issued 9% Debentures of ` 100 each at a discount of 5% in full satisfaction of the purchase consideration in favour of Cayns Ltd. Pass necessary journal entries in the books of Venus Ltd. for the above transactions. Also identify the value observed by Venus Ltd.

Answer 1

Answer:

1st journal entry : Assets a/c Dr. 10,00,000

to liabilities a/c 1,80,000

to venus ltd a/c 8,20,000

2nd :venus ltd a/c dr. 7,60,000

share discount a/c dr.40,000

to 9%debenture a/c 8,00,000

Explanation:

purchase consideration 760000

discount of 5% (100--5=95)

no. of debentures =760000/95=8000

Answer 2

Answer:

1. Asset A/C Dr. 10,00,000

To Liability A/C 1,80,000

To balajee Ltd A/C 8,20,000

2. Balajee Ltd A/C Dr. 7,60,000

Discount on issues of debentures A/C. 40,000

To 10% Debentures A/C. 8,00,000

Explanation:

No. of Debentures issue =Amount payable/Current value of debentures.

=760000/95

=8000

issues of debentures at discount 5%(100-5)

=95