Question

Gundola Ltd. took over assets of ₹ 9,00,000 and liabilities of ₹ 3,00,000 from AK Ltd. for an agreed purchase consideration of ₹ 14,00,000. The payment was made through a bank draft of ₹ 5,00,000 and the remaining by issue of 8\% Debentures at a discount of 10\%.
Record necessary journal entries in the books of Gundola Ltd. for the above transactions.

Hint:

For transactions involving asset purchases with securities issued at a discount: 1. Record assets and liabilities taken over. 2. Record the payment through bank and debentures issued at a discount. 3. Account for the discount on debentures as a separate account.

Answer 1

\[ \begin{array}{|l|l|r|r|} \hline Date & Particulars & Dr (₹) & Cr (₹)
\hline \text{2023} & & &
\text{April 1} & Assets A/c & 9,00,000 &
& Liabilities A/c & 3,00,000 &
& To AK Ltd. A/c & & 14,00,000
& \textit{(Being purchase of assets and assumption of liabilities from AK Ltd.)} & &
\hline \text{April 1} & AK Ltd. A/c & 14,00,000 &
& To Bank A/c & & 5,00,000
& To 8\% Debentures A/c & & 8,40,000
& To Discount on Issue of Debentures A/c & & 60,000
& \textit{(Being payment made partly in cash and balance through issuance of 8\% Debentures at a 10\% discount)} & &
\hline \end{array} \] \normalsize