X company purchased a business costing Rs. 30,00,000. The payment was made by cash Rs. 25,00,000 and balance through Bank Draft. The issue price of a share is Rs. 10. The Assets and Liabilities are as follows:
Plant: Rs. 7,00,000
Stock: Rs. 9,00,000
Land and Building: Rs. 12,00,000
Sundry Creditors: Rs. 2,00,000.
Give Journal entries.
Share
1. **Purchase of Business Assets:**
- Debit: Plant Rs. 7,00,000
- Debit: Stock Rs. 9,00,000
- Debit: Land and Building Rs. 12,00,000
- Credit: Cash Rs. 25,00,000
- Credit: Bank Draft (Bank) Rs. 5,00,000 (This is the balance amount paid through a bank draft.)
2. **Assumption of Liabilities:**
- Debit: Sundry Creditors Rs. 2,00,000
- Credit: Cash Rs. 2,00,000
3. **Issuance of Shares to the Seller (If applicable, based on the agreement):**
- Debit: Business Seller's Account (If shares are issued to the seller)
- Credit: Share Capital Account (If shares are issued to the seller)
These entries reflect the purchase of business assets, the assumption of liabilities, and any issuance of shares if mentioned in the agreement. Please consult with a financial advisor or accountant for specific guidance based on your business's circumstances.