why does this purchase consideration entry seem different and why hasn't JSS Ltd been credited as the vendor?
Illustration 15. Lemon Tree Ltd. Purchased a piece of land from JSS Ltd. and paid the consideration as follows:
(i) Issued a cheque for Rs. 10,00,000:
(ii) Issued a Bill of Exchange for 3 Months for Rs. 5,00,000;
(iii) Issued 5,000; 9% Debentures of Rs. 100 each at per redeemable at 10 % premium after 5 years. Pass the Journal entry.
Solution.
I the Books of lemon tree Ltd. JOURNAL |
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Date | Particulars | L.F. | Dr. (Rs.) | Cr. (Rs) |
Land A/c Loss on issue of Debentures A/c To Bank A/c To Bank A/c To 9% Debentures A/c To Premium of Redemption of Debentures A/c (Being the land purchased and consideration paid) |
20,00,000
50,000 |
10,00,000
5,00,000 5,00,000 50,000
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Dear Student,
The entry that you posted is a compound entry and JSS Ltd. in entry 1 is cancelled with JSS Ltd. in entry 2. The two entries are separately shown below.
The entry that you posted is a compound entry and JSS Ltd. in entry 1 is cancelled with JSS Ltd. in entry 2. The two entries are separately shown below.
Journal | |||||
Date | Particulars | L.F. | Debit Amount (Rs) |
Credit Amount (Rs) |
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Land A/c | Dr. | 20,00,000 | |||
To JSS Ltd. | 20,00,000 | ||||
(Land purchased from JSS Ltd.) | |||||
JSS Ltd. | Dr. | 20,00,000 | |||
Loss on Issue of Debentures A/c | Dr. | 50,000 | |||
To Bank A/c | 10,00,000 | ||||
To Bills Payable A/c | 5,00,000 | ||||
To 9% Debentures A/c | 5,00,000 | ||||
To Premium on Redemption of Debentures A/c | 50,000 | ||||
(JSS Ltd. Issued cheque, bill and 9% Debentures of Rs 100 each at a premium of 10%) | |||||