Question

Nikhil and Ashwin Limited bought business of Agarwal Limited consisting sundry assts of Rs. 3,60,000, sundry creditors Rs. 1,00,000 for a consideration ofRs. 3,07,200. It issued 14% debentures of Rs. 100 each fully paid at a discount of 4% in satisfaction of purchase consideration. Record necessary journal entries.

Answer 1

Working note:

Note: If business is purchased and assets and liabilities are mentioned along with purchase price, pass a journal entry. To balance the entry use word ‘Goodwill’ if difference is on debit side and word ‘Reserves’ if difference is on credit side.