ABC Limited purchased assets of a book value of र2,00,000 from another company and agreed to make the payment of purchase consideration by issuing 2,000, 10% debentures of र100 each. What will be the journal entry for the issue of the debentures?
Answer & explanation
Correct answer: option 1
The correct answer is option 1-
Vendor A/c Dr. र2,00,000
To 10% Debentures A/c र2,00,000
(Debentures issued)
1. On purchase of assets:
Sundry Assets A/c Dr. र2,00,000
To Vendor A/c र2,00,000
2. On issue of debentures at par:
Vendor A/c Dr. र2,00,000
To 10% Debentures A/c र2,00,000