Question

Mahesh Ltd. purchased Plant and Machinery from Ish Ltd. for \rupee4,50,000. \rupee50,000 was paid by cheque to Ish Ltd., and the balance by issuing 6\% debentures of \rupee100 each at a discount of 20\%. Pass the necessary Journal Entries for the above transactions in the books of Mahesh Ltd.

Hint:

In cases of debenture issues at a discount, calculate the net amount raised and ensure that the journal entries reflect the discount adjustment.

Answer 1

% Journal Entries \begin{center} \begin{tabular}{|p{3cm}|p{8cm}|p{2.5cm}|p{2.5cm}|} Date & Particulars & Debit (\rupee) & Credit (\rupee)
1-Apr-2023 & Plant and Machinery A/c & 4,50,000 &
& {0.5cm} To Ish Ltd. A/c & & 4,50,000
& (Purchase of plant and machinery on credit) & &
1-Apr-2023 & Ish Ltd. A/c & 4,50,000 &
& {0.5cm} To Bank A/c & & 50,000
& {0.5cm} To 6\% Debentures A/c & & 4,00,000
& (Payment made by cheque and issue of 6\% debentures at a discount of 20\%) & &
\end{tabular} \end{center}