Raunak Cotton Ltd. purchased machinery of ₹ $\displaystyle 6,80,000$ from Heavy Machines Ltd. The Payment to Heavy Machines Ltd. was made by issuing $\displaystyle 10,500$ equity shares of ₹ $\displaystyle 50$ each at a premium of $\displaystyle 20$% and the balance through a cheque. Pass necessary journal entries for the above transactions in the books of Raunak Cotton Ltd.

OR

Neo Ltd. took over assets of ₹ $\displaystyle 25,00,000$ and liabilities of ₹ $\displaystyle 12,00,000$ of Madura Ltd. for a purchase consideration of ₹ $\displaystyle 18,00$,000. Neo Ltd. issued $\displaystyle 11$% debentures of ₹ $\displaystyle 100$ each at a discount of $\displaystyle 10$% in full satisfaction of the purchase consideration. Pass necessary journal entries for the above transactions in the books of Neo Ltd.

Books of Raunak Cotton Ltd. Journal Date Particulars L.F. Dr. Cr. Amount Amount (₹) (₹) Machinery A/c Dr. $\displaystyle 6,80,000$ To Heavy Machines Ltd. $\displaystyle 6,80,000$ (Machinery purchased from Heavy Machines Ltd.) Heavy Machines Ltd. Dr. $\displaystyle 6,80,000$ To Equity Share Capital A/c $\displaystyle 5,25,000$ To Securities Premium A/c $\displaystyle 1,05,000$ To Bank A/c $\displaystyle 50,000$ (Paid Heavy Machines Ltd. by issue of equity shares at a premium and the balance through a cheque) Alternatively the following two entries may be passed- Heavy Machines Ltd. Dr. $\displaystyle 6,30,000$ To Equity Share Capital A/c $\displaystyle 5,25,000$ To Securities Premium A/c $\displaystyle 1,05,000$ (Paid Heavy Machines Ltd. by issue of equity shares at a premium) $\displaystyle 7$ Heavy Machines Ltd. Dr. $\displaystyle 50,000$ To Bank A/c $\displaystyle 50,000$ (Balance due to Heavy Machines Ltd. paid through a cheque) Q. (b) Neo Ltd. took over assets of ₹$\displaystyle 25,00,000$… Ans. Books of Neo Ltd. Journal Date Particulars L.F. Dr. Cr. Amount Amount (₹) (₹) Assets A/c Dr. $\displaystyle 25,00,000$ Goodwill A/c Dr. $\displaystyle 5,00,000$ To Liabilities A/c $\displaystyle 12,00,000$ To Madura Ltd. $\displaystyle 18,00,000$ (Assets and liabilities of Madura Ltd. taken over) Madura Ltd. Dr. $\displaystyle 18,00,000$ Discount on issue of debentures A/c Dr. $\displaystyle 2,00,000$ To $\displaystyle 11$% Debentures A/c $\displaystyle 20,00,000$ (Paid Madura Ltd. by issue of $\displaystyle 20,000$ debentures at a discount of $\displaystyle 10$%) . Working Note: Number of debentures= ₹$\displaystyle 18,00,000$/ $\displaystyle 90$ = $\displaystyle 20,000$