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Question 22 Chapter 9 of +2-A
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22. Exe Ltd. purchased the assets of the book value ₹4,00,000 and took over the liabilities of ₹ 50,000 from Mohan Bros.It was agreed that the purchase consideration ,settled at ₹3,80,000 be paid by issuing debentures of ₹ 100 each.
Pass journal entries if debenture are issued:
(a) at par
(b) at a discount of 10% and
(c) at a premium of 10%.
It was agreed that any fraction of debentures be paid in cash..
The solution of Question 22 Chapter 9 of +2-A: –
| Date | Particulars | L.F. | Debit | Credit | |
| Assets A/c | Dr | 4,00,000 | |||
| Goodwill A/c | Dr | 30,000 | |||
| To Liabilities A/c | 50,000 | ||||
| To Mohan Bros A/c | 3,80,000 | ||||
| (Being assets and liabilities purchased from Mohan Bros. ) | |||||
| When Debenture issued at par | |||||
| Mohan Bros A/c | Dr | 3,80,000 | |||
| To Debenture A/c | 3,80,000 | ||||
| (Being Debenture issued at securities premium) | |||||
Working Note
| No of Debenture to be issued | = | Purchase consideration | = | 3,80,000 | = | 3,800 debentures |
| Issue price | 100 |
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| Date | Particulars | L.F. | Debit | Credit | |
| Assets A/c | Dr | 4,00,000 | |||
| Goodwill A/c | Dr | 30,000 | |||
| To Liabilities A/c | 50,000 | ||||
| To Mohan Bros A/c | 3,80,000 | ||||
| (Being assets and liabilities purchased from Mohan Bros. ) | |||||
| When Debenture issued at 10% Discount | |||||
| Mohan Bros A/c | Dr | 3,80,000 | |||
| Discount on Issue of Debenture A/c | Dr | 42,220 | |||
| To Debenture A/c | 4,22,200 | ||||
| To Bank A/c | 20 | ||||
| (Being Debenture issued at securities premium) | |||||
| No of Debenture to be issued | = | Purchase consideration | = | 3,80,000 | = | 4,222 debentures |
| Issue price | 90 |
| Date | Particulars | L.F. | Debit | Credit | |
| Assets A/c | Dr | 4,00,000 | |||
| Goodwill A/c | Dr | 30,000 | |||
| To Liabilities A/c | 50,000 | ||||
| To Mohan Bros A/c | 3,80,000 | ||||
| (Being assets and liabilities purchased from Mohan Bros. ) | |||||
| When Debenture issued at 10% premium | |||||
| Mohan Bros A/c | Dr | 3,80,000 | |||
| To Debenture A/c | 3,45,400 | ||||
| To Securities Premium A/c | 34,540 | ||||
| To Bank A/c | 60 | ||||
| (Being Debenture issued at securities premium) | |||||
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| No of Debenture to be issued | = | Purchase consideration | = | 3,80,000 | = | 3,454.6 Debentures |
| Issue price | 110 |
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Also, Check out the solved question of previous Chapters: –
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T.S. Grewal’s Double Entry Book Keeping +2 (Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms)
- Chapter No. 1 – Financial Statement of Not-For-Profit Organisations
- Chapter No. 2 – Accounting for Partnership Firms – Fundamentals
- Chapter No. 3 – Goodwill: Nature and Valuation
- Chapter No. 4 – Change in Profit-Sharing Ratio Among the Existing Partners
- Chapter No. 5 – Admission of a Partner
- Chapter No. 6 – Retirement/Death of a Partner
- Chapter No. 7 – Dissolution of a Partnership Firm
T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)
- Chapter No. 8 – Company Accounts – Accounting for Share Capital
- Chapter No. 9 – Company Accounts – Issue of Debentures
- Chapter No. 10 – Redemption of Debentures
T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)
- Chapter No. 1 – Financial Statements of a Company
- Chapter No. 2 – Financial Statement Analysis
- Chapter No. 3 – Tools of Financial Statement Analysis – Comparative Statements and Common- Size Statements
- Chapter No. 4 – Accounting Ratios
- Chapter No. 5 – Cash Flow Statement
Check out T.S. Grewal +2 Book 2020@ Official Website of Sultan Chand Publication
