Page 531 - AAAXII

Model Test Papers M.509

17. (a) In the Books of Strong Ltd.
JOURNAL
Date Particulars L.F. Dr. (`) Cr. (`)
2014
April 1 Sundry Assets A/c ...Dr. 8,00,000
Goodwill A/c (Balancing Figure) ...Dr. 20,000
To Sundry Liabilities A/c 2,70,000
To Star Ltd. 5,50,000
(Being the purchase of business of Star Ltd.)

April 1 Star Ltd. ...Dr. 5,50,000
Loss on Issue of Debentures A/c ...Dr. 25,000
To 10% Debentures A/c 5,00,000
To Securities Premium Reserve A/c 50,000
To Premium on Redemption of Debentures A/c 25,000
(Being 5,000; 10% Debentures issued at 10% premium and redeemable
at 5% premium) (Note)
2017
March 31 Surplus, i.e., Balance in Statement of Profit and Loss A/c ...Dr. 1,25,000
To Debentures Redemption Reserve A/c (` 5,00,000 × 25/100) 1,25,000
(Being the transfer of Profit to Debentures Redemption Reserve)
April 30 Debentures Redemption Investment A/c ...Dr. 75,000
To Bank A/c 75,000
(Being the investment made @ 15% of the face value of debentures
to be redeemed)
2018
March 31 Bank A/c ...Dr. 75,000
To Debentures Redemption Investment A/c 75,000
(Being the investment encashed)
March 31 10% Debentures A/c ...Dr. 5,00,000
Premium on Redemption of Debentures A/c ...Dr. 25,000
To Debentureholders’ A/c 5,25,000
(Being the amount due to debentureholders on redemption)
March 31 Debentureholders’ A/c ...Dr. 5,25,000
To Bank A/c 5,25,000
(Being the payment made to debentureholders)
March 31 Debentures Redemption Reserve A/c ...Dr. 1,25,000
To General Reserve A/c 1,25,000
(Being the transfer of DRR on the redemption of all debentures)

Note:
Number of Debentures to be issued = Purchase Price/Issue Price = ` 5,50,000/` 110 = 5,000 Debentures.
(b)
Date Particulars L.F. Dr. (`) Cr. (`)
Share Capital A/c ...Dr. 140
To Forfeited Shares A/c (20 × ` 5) 100
To Shares First Call A/c (20 × ` 2) 40
(Being 20 shares forfeited for non-payment of first call of ` 2)