Question

Sunrise Ltd. acquired assets of \rupee3,60,000 and took over creditors of \rupee1,00,000 from Moonlight Ltd. for an agreed purchase consideration of \rupee4,80,000. Sunrise Ltd. issued 9\% Debentures of \rupee100 each at a discount of 4\% in satisfaction of the purchase consideration. Pass necessary journal entries in the books of Sunrise Ltd.

Hint:

When debentures are issued at a discount, the total discount is treated as a loss and debited to the "Discount on Issue of Debentures A/c."

Answer 1

Step 1: Calculation of Issue Price of Debentures - Face value of debentures = \rupee100 each. - Discount = \(4\%\) of \rupee100 = \rupee4. - Issue price = \rupee100 - \rupee4 = \rupee96 per debenture. \[ \text{Number of Debentures to be Issued} = \frac{\text{Purchase Consideration}}{\text{Issue Price}} = \frac{4,80,000}{96} = 5,000 \text{ Debentures}. \] Journal Entries: \begin{center} \begin{tabular}{|l|p{8cm}|c|r|} \hline Date & Particulars & L.F. & Amount (\rupee)
\hline 2025-01-14 & Sundry Assets A/c Dr. & & 3,60,000
\cline{2-4} & Creditors A/c Dr. & & 1,00,000
\cline{2-4} & To Moonlight Ltd. & & 4,80,000
\cline{2-4} & \multicolumn{3}{|l|}{(Being assets and liabilities taken over from Moonlight Ltd.)}
\hline 2025-01-14 & Moonlight Ltd. Dr. & & 4,80,000
\cline{2-4} & To 9\% Debentures A/c & & 5,00,000
\cline{2-4} & To Discount on Issue of Debentures A/c & & 20,000
\cline{2-4} & \multicolumn{3}{|l|}{(Being issue of 5,000 debentures of \rupee100 each at a discount of 4\%)}
\hline \end{tabular} \end{center}