Romi Ltd. acquired assets of ₹20 lakh and took over creditors of ₹2 lakh from Kapil Enterprises. Romi Ltd. issued 8% debentures of ₹100 each at par as purchase consideration. What will be the journal entry for the purchase of the business?

Sundry Assets A/c               Dr. ₹20,00,000
      To Kapil Enterprises                              ₹18,00,000
      To Sundry Creditors A/c                        ₹2,00,000
(Purchase of the Vendors’ business)

The correct answer is option 1-
Sundry Assets A/c               Dr. ₹20,00,000
      To Kapil Enterprises                              ₹18,00,000
      To Sundry Creditors A/c                        ₹2,00,000
(Purchase of the Vendors’ business)

Purchase consideration = 20,00,000 - 2,00,000
                                     = ₹18,00,000
Journal entry will be:
Sundry Assets A/c               Dr. ₹20,00,000
      To Kapil Enterprises                   ₹18,00,000
      To Sundry Creditors A/c             ₹2,00,000
(Purchase of the Vendors’ business)