Q Mohit ltd took over assets of Rs 8,40,000 and liabilities of Rs 80,000 of - Accountancy - Accounting for Share Capital

Question

Q Mohit ltd took over assets of Rs 8,40,000 and liabilities of Rs
80,000 of Ram Ltd at agreed value of Rs 7,20,000 Mohit ltd paid to
Ram ltd by issuing of 9% debentures of Rs 100 each at premium of
20%
Pass the necessary journal entries

Neha Chopra · Accepted Answer

Dear Student

Journal in the books of Mohit Ltd

Date
Particulars

Debit
Credit

Business Purchase A/c
Dr
720,000

To Ram Ltd A/c

720,000

(Being purchase consideration due)

Assets A/c
Dr
840,000

To Liabilities A/c

80,000

To Business Purchase A/c

720,000

To Capital Reserve A/c

40,000

(Being assets and liabilities incorporated
in our books difference is adjusted in capital reserve)

Ram Ltd A/c
Dr
720,000

To Debenture A/c (7,20,000 / 120) x
100

600,000

To Securities Preimum A/c (7,20,000 / 120)
x 20

120,000

(Being purchase consideration paid by
issuing 6,000 debentures (7,20,000 / 120) of Rs 100 at a permium of
20 Rs)

Number of Debentures to be issued = Total amount to be paid / Issue
price of debentures = 7,20,000 / 120 = 6,000 debentures

Regards

Journal in the books of Mohit Ltd.
Date	Particulars		Debit	Credit
	Business Purchase A/c	Dr.	720,000
	To Ram Ltd A/c			720,000
	(Being purchase consideration due)

	Assets A/c	Dr.	840,000
	To Liabilities A/c			80,000
	To Business Purchase A/c			720,000
	To Capital Reserve A/c			40,000
	(Being assets and liabilities incorporated in our books difference is adjusted in capital reserve)

	Ram Ltd A/c	Dr.	720,000
	To Debenture A/c (7,20,000 / 120) x 100			600,000
	To Securities Preimum A/c (7,20,000 / 120) x 20			120,000
	(Being purchase consideration paid by issuing 6,000 debentures (7,20,000 / 120) of Rs 100 at a permium of 20 Rs)

Q. Mohit ltd took over assets of Rs. 8,40,000 and liabilities of Rs. 80,000 of Ram Ltd. at agreed value of Rs. 7,20,000. Mohit ltd paid to Ram ltd by issuing of 9% debentures of Rs. 100 each at premium of 20% . Pass the necessary journal entries.

Q. Mohit ltd took over assets of Rs. 8,40,000 and liabilities of Rs. 80,000 of Ram Ltd. at agreed value of Rs. 7,20,000. Mohit ltd paid to Ram ltd by issuing of 9% debentures of Rs. 100 each at premium of 20% .
Pass the necessary journal entries.