Rama Limited took over following Assets and liabilities of Krishna Limited on 1st April 2019 land and building 5000000 furniture - Accountancy - Issue of Debentures

Question

Rama Limited took over following Assets and liabilities of Krishna
Limited on 1st April 2019 land and building 5000000 furniture 10
lakh stock 500000 creditors 700000 the Purchase consideration of 60
lakh was paid by issuing 12% debenture of rupees hundred each at a
premium of 20% pass the necessary journal entries for the above in
the books of Rama Limited

Shruti Mishra · Accepted Answer

Solution :-

Books of Rama Limited
JOURNAL

S No
Particulars
L F
Debit
Credit

1)
Land and Building A/c Dr

50,00,000

Furniture A/c Dr

10,00,000

Stock A/c Dr

5,00,000

Goodwill A/c Dr

2,00,000

To Sundry Creditors A/c

7,00,000

To Krishna Ltd A/c

60,00,000

(Being Business purchased )

2)
Krishna Ltd A/c Dr

60,00,000

To 12% Debentures A/c [50,000 x 100]

50,00,000

To Securities Premium Reserve A/c [50,000x200]

10,00,000

(Being Consideration paid by 12% Debenture )

Working Notes:-
Number of Debentures to be issued = Purchase Consideration / Issue
Price
= 60,00,000 /120
= 50,000

S.No.	Particulars	L.F	Debit	Credit
1)	Land and Building A/c Dr.		50,00,000
	Furniture A/c Dr.		10,00,000
	Stock A/c Dr.		5,00,000
	Goodwill A/c Dr.		2,00,000
	To Sundry Creditors A/c			7,00,000
	To Krishna Ltd. A/c			60,00,000
	(Being Business purchased.)

2)	Krishna Ltd. A/c Dr.		60,00,000
	To 12% Debentures A/c [50,000 x 100]			50,00,000
	To Securities Premium Reserve A/c [50,000x200]			10,00,000
	(Being Consideration paid by 12% Debenture.)