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✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
Green Ltd. purchased the assets of Strong Ltd. for ₹40,00,000 and took over liabilities of ₹7,00,000, at an agreed value of ₹32,40,000. Payment was made by issuing 10% Debentures of ₹100 each at a discount of 10%. Pass the necessary Journal entries in the books of Green Ltd.
JOURNAL (Books of Green Ltd.)
| Date | Particulars | L.F. | Dr. (₹) | Cr. (₹) |
|---|---|---|---|---|
| Sundry Assets A/c Dr. | 40,00,000 | |||
| To Sundry Liabilities A/c | 7,00,000 | |||
| To Strong Ltd. A/c | 32,40,000 | |||
| To Capital Reserve A/c | 60,000 | |||
| (Purchase of business of Strong Ltd.; Capital Reserve recognised as the excess of net assets acquired over the purchase consideration) | ||||
| Strong Ltd. A/c Dr. | 32,40,000 | |||
| Discount on Issue of Debentures A/c (36,000 × ₹10) Dr. | 3,60,000 | |||
| To 10% Debentures A/c | 36,00,000 | |||
| (36,000; 10% Debentures issued as purchase consideration) |
Working Note: Net assets acquired = 40,00,000 − 7,00,000 = ₹33,00,000. Capital Reserve = 33,00,000 − 32,40,000 = ₹60,000. Number of debentures issued = 32,40,000 ÷ 90 = 36,000.
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.25 - Issue of Debentures", focusing on key definitions, step-by-step concepts, applications, and revision guidelines relevant to Chapter 2 - Issue of Debentures.
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