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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.

OR

Youth Ltd. took a loan of ₹ 15,00,000 from State Bank of India against the security of tangible assets. In addition to principal security, it issued 10,000 11% debentures of ₹ 100 each as collateral security.

Pass necessary journal entries for the above transactions, if the company decided to record the issue of 11% debentures as collateral security and show the presentation in the Balance Sheet of Youth Ltd.

1 Answer

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In the Books of Vedesh Ltd. 

Journal

Working Note: 

Number of Debentures issued = 9,50,000 / 95 = 10,000

OR 

In the Books of Youth Ltd.

Journal

Balance sheet of Youth Ltd. (An extract)

Notes to Accounts:1

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