The Question : Vedesh Ltd. purchased a running business of Vibhu Enterprises for a sum of ₹ 12,00,000. Vedesh Ltd. paid ₹ 60,000 by drawing a promissory note in favour of Vibhu Enterprises., ₹1,90,000 through bank draft and balance by issue of 8% debentures of ₹ 100 each at a discount of 5%. The assets and liabilities of Vibhu Enterprises consisted of Fixed Assets valued at ₹ 17,30,000 and Trade Payables at ₹ 3,20,000. You are required to pass necessary journal entries in the books of Vedesh Ltd.
Solution for the question :
In the Books of Vedesh Ltd. JournalDateParticularsL.F.Dr. Amount (₹)Cr. Amount (₹)Fixed Assets A/c Dr.17,30,000To Trade Payables A/c3,20,000To Vibhu Enterprises12,00,000To Capital Reserve A/c 2,10,000 (Being assets purchased and liabilities taken over of Vibhu Enterprises)Vibhu Enterprises Dr.12,00,000Discount on Issue of Debentures A/c Dr.50,000To Bills Payable A/c60,000To Bank A/c1,90,000To 8% Debentures A/c10,00,000(Being issue of bank draft, acceptance of bill and issue of 8% debentures in settlement of purchase consideration)Working Note: Number of Debentures issued = 9,50,000 / 95 = 10,000
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