The following journal entries will be recorded in the books of Sumi Ltd.:
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Particulars & Dr Amount (₹) & Cr Amount (₹)
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Assets A/c & 8,00,000 & --
Sundry Creditors A/c & -- & 2,00,000
To Pandora Ltd. & -- & 9,00,000
(Being the purchase of assets and assumption of liabilities) & &
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Pandora Ltd. A/c & 9,00,000 & --
To Bank A/c & -- & 4,60,000
To 9\% Debentures A/c & -- & 4,00,000
To Securities Premium A/c & -- & 40,000
(Being payment made to Pandora Ltd. through cheque and issue of debentures at a 10\% premium) & &
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Explanation:
- Sumi Ltd. acquired assets valued at ₹ 8,00,000 and assumed liabilities of ₹ 2,00,000 from Pandora Ltd., with a total purchase consideration of ₹ 9,00,000.
- The ₹ 9,00,000 payment to Pandora Ltd. was settled as follows:
- ₹ 4,60,000 via cheque.
- ₹ 4,00,000 by issuing 9% debentures at par.
- The remaining ₹ 40,000 was credited to Securities Premium Account, reflecting a 10% premium on the debenture issue.