Answer the questions from the passage-
XYZ Ltd. purchased assets worth Rs 3,00,000 from Blue Prints Ltd., and took overs its liabilities of Rs 20,000 for a purchase consideration of Rs 3,15,000. XYZ Ltd., paid the purchase consideration by issuing 12% debentures of Rs 100 each at a premium of 5%.
Blue Prints Ltd., account will be:
Answer & explanation
Correct answer: option 4
The correct answer is Option 4: Credited by Rs 3,15,000
When XYZ Ltd. purchases the business, the vendor (Blue Prints Ltd.) is credited with the purchase consideration payable to them.
Here, purchase consideration = Rs 3,15,000.
Hence, Blue Prints Ltd.’s Account will be credited by Rs 3,15,000 in the books of XYZ Ltd.
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