Wellbeing Ltd. Took over assets of ₹ 9,80,000 and liabilities of ₹ 40,000 of HDR Ltd. At an agreed value of ₹ 9,00,000. Wellbeing Ltd. Paid to HDR Ltd. Bu issue of 9% Debentures of 100 each at a premium of 20% . Pass necessary Journal entries to record the above transaction in the books of Wellbeing Ltd.

Answer

(i) Dr. Sundry Assets A/c by ₹ 9,80,000, Cr. Sundry Liabilities A/c by ₹ 40,000; HDR Ltd by ₹ 9,00,000 and Capital Reserve A/c by ₹ 40,000.
(ii) Dr. HDR Ltd. By ₹ 9,00,000, Cr 9% Debentures A/c by ₹ 7,50,000 and Securities Premium Reserve A/c by 1.50,000.
Number of Debentures to be issued = ₹ 9,00,000/ ₹ 120=7,500 Debentures.