B.Ltd. Purchased Assets of the Book Value of Rs 4,00,000 and Took Over the Liability of Rs 50,000 From Mohan Bros.-Bzzii

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B.Ltd. purchased assets of the book value of Rs 4,00,000 and took over the liability of Rs 50,000 from Mohan Bros. It was agreed that the purchase consideration, settled at Rs,3,80,000, be paid by issuing debentures of Rs 100 each.

What Journal entries will be made in the following three cases, if debentures are issued: (a) at par; (b) at discount; (c) at premium of 10%? It was agreed that any fraction of debentures be paid in cash.




Books of B.Ltd.

Journal

DateParticularsL.F.Amount 
( Dr.)		Amount
 (Cr.)
 Sundry Assets A/cDr. 4,00,000
 Goodwill A/cDr. 30,000
   To Sundry Liabilities A/c  50,000
   To Mohan Bros.  3,80,000
 ( Being Assets and liabilities of Mohan Bros. taken over)   
     
 Mohan Bros.Dr. 3,80,000
   To Debenture A/c  3,80,000
 ( Being 3,800 debentures of 100 each issued to Mohan Bros. inconsideration of assets and liabilities)   
     

Case (b)

Date  Particulars   L.F. Amount
 ( Dr.)		Amount
 ( Cr.)
 Sundry Assets A/cDr. 4,00,000
 Goodwill A/cDr. 30,000
   To Sundry Liabilities A/c  50,000
   To Mohan Bros.  3,80,000
 ( Being Assets and liabilities of Mohan Bros. taken over)   
     
 Mohan Bros.Dr. 3,80,000
 Discount on Issue of Debenture A/cDr. 42,222
   To Debenture A/c  4,22,200
   To Bank A/c  22
 ( Being Issued 4,222 debentures of Rs 100 each at 10% discountand balance paid in cash)   
     

Case (c)

Date   Particulars     L.F. Amount 
( Dr.) 		 Amount 
( Cr.)
Sundry Assets A/cDr. 4,00,000 
 Goodwill A/cDr. 30,000 
   To Sundry Liabilities A/c  50,000
   To Mohan Bros.  3,80,000
( Being Assets and liabilities of Mohan Bros. taken over)
      
 Mohan BrosDr. 3,80,000 
   To Debentures A/c  3,45,400
   To Securities Premium A/c  34,540
   To Bank A/c  60
( Being Issued of 3,454 debentures at 10% premium and balance paid in cash)

Chapter-2 Issue and Redemption of Debentures-II



Location: India

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