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✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
Rama Ltd. took over the following assets and liabilities of Krishna Ltd. on 1st April, 2019: Land and Building ₹50,00,000, Furniture ₹10,00,000, Stock ₹5,00,000, Creditors ₹7,00,000. The purchase consideration of ₹60,00,000 was paid by issuing 12% Debentures of ₹100 each at a premium of 20%. Pass the necessary Journal entries for the above in the books of Rama Ltd. (CBSE 2020)
JOURNAL (Books of Rama Ltd.)
| Date | Particulars | L.F. | Dr. (₹) | Cr. (₹) |
|---|---|---|---|---|
| Goodwill A/c Dr. | 2,00,000 | |||
| Land and Building A/c Dr. | 50,00,000 | |||
| Furniture A/c Dr. | 10,00,000 | |||
| Stock A/c Dr. | 5,00,000 | |||
| To Krishna Ltd.’s A/c | 60,00,000 | |||
| To Creditors A/c | 7,00,000 | |||
| (Assets and liabilities taken over from Krishna Ltd.; Goodwill recognised as the excess of purchase consideration over net assets acquired) | ||||
| Krishna Ltd.’s A/c Dr. | 60,00,000 | |||
| To 12% Debentures A/c | 50,00,000 | |||
| To Securities Premium Reserve A/c | 10,00,000 | |||
| (50,000; 12% Debentures of ₹100 each issued at a premium of 20% (₹120 per debenture), in discharge of the ₹60,00,000 purchase consideration) |
Working Note: Net assets acquired = 50,00,000 + 10,00,000 + 5,00,000 − 7,00,000 = ₹58,00,000. Goodwill = 60,00,000 − 58,00,000 = ₹2,00,000. Number of debentures = 60,00,000 ÷ 120 = 50,000.
Accounting & Commerce Educator
Sarbjit Singh holds a B.Com and M.Com degree and has over 12 years of teaching experience in double entry bookkeeping, financial accounting, and business studies.
This guide covers "T.S. Grewal Class 12 Vol 2 Chapter 2 Q.23 - Issue of Debentures", focusing on key definitions, step-by-step concepts, applications, and revision guidelines relevant to Chapter 2 - Issue of Debentures.
It is primarily curated for Class 11 and Class 12 high school commerce, accounting, and economics students, as well as aspirants preparing for board exams or CA Foundation.
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