Page 15 - DCOM205_ACCOUNTING_FOR_COMPANIES_II

Accounting for Companies – II

notes Less liabilities taken:
Creditors 1, 00,000
Bills payable 40,000 1, 40,000
Purchase consideration 1, 25,000

Journal entries
Date particulars l.f. ` `
Business Purchase Account Dr. 1, 25,000
To Raheza Brothers 1, 25,000
(Being record of purchase consideration)
Goodwill account Dr. 25,000
Machinery account Dr. 80,000
Patents account Dr. 60,000
Debtors’ Account Dr. 40,000
Stock Account Dr. 60,000
To Creditors Account 1, 00,000
To Bills Payable Account 40,000
To Business Purchase Account 1, 25,000
(Being above assets and liabilities taken over)
Raheza Brothers Dr. 1, 25,000
To Equity Share Capital Account 1, 00,000
To Debentures Account 25,000
(Being payment made to Reheza Brothers in shares and debentures)

Balance sheet of karan & company limited
as on 1 January, 2012
st
liabilities ` assets `
Equity Share Capital Goodwill 25,000
(10,000 share of ` 10 each) 1, 00,000 Machinery 80,000
Debentures (250 debentures of ` 100 each) 25,000 Patents 60,000

Creditors 1, 00,000 Debtors 40,000
Bills payable 40,000 Stock 60,000
2, 65,000 2, 65,000
Illustration 4 (Calculation of Purchase Price and Balance Sheet)
The following is the Balance Sheet of Rohan & Sons as on 31st December 2011:
liabilities ` assets `
Capital 5, 00,000 Goodwill 87,500
Revenue Reserve 50,000 Building 2, 12,500
Bank Loan 2, 50,000 Plant & Machinery 4, 00,000
Bills Payable 1, 00,000 Stock 1, 37,500
Creditors 2, 00,000 Sundry Debtors 1, 62,500

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