Skip to content

Buddha Limited… (Class 12 Accountancy SQP 2024-25, Q19a)

questionbuddy.in/q/cbse-12-accountancy-2024-25-sqp-q19a-buddha-limited-took-over-assets

AccountancyCBSE Class 12 · Sample paper, session 2024-25 · 3 marks · Short answer

CBSE Class 12 Accountancy sample paper 2024-25: question 19(a)

From the official CBSE sample question paper for 2024-25, section A, question 19(a), for 3 marks. Try it first; the hints and our step-by-step solution are below.

Q19(a) · 3 marks · Short answerIssue and Redemption of Debentures

Buddha Limited took over assets of ₹ 40,00,000 and liabilities of ₹ 6,50,000 of Ginny Limited. Buddha Limited issued 30,000, 8% Debentures of ₹ 100 each at 10% discount, to be redeemed at 5% premium along with cheque of ₹ 5,00,000. Pass necessary journal entries in the books of Buddha Ltd.

Source: official sample paper from cbseacademic.nic.in (PDF). See it in the full Sample paper 2024-25.

Hints

Open one hint at a time and try again before the next.

Hint 1

Debentures at 10% discount are issued at ₹ 90 each.

Hint 2

Consideration below net assets gives a capital reserve.

Hint 3

Loss on issue = discount + premium payable on redemption.

Step-by-step solution

Each step shows the marks it earns, as an examiner would award them. Checked by an independent re-solve from the question paper.

  1. Net assets = ₹ 40,00,000 − ₹ 6,50,000 = ₹ 33,50,000. Consideration = 30,000 × ₹ 90 + ₹ 5,00,000 = ₹ 32,00,000, so Capital Reserve = ₹ 1,50,000.

    ParticularsDr. (₹)Cr. (₹)
    Sundry Assets A/c Dr.40,00,000
    To Sundry Liabilities A/c6,50,000
    To Ginny Ltd.32,00,000
    To Capital Reserve A/c1,50,000
    (Being business taken over and capital reserve recorded)
    1½ marks

  2. Loss on issue = discount ₹ 3,00,000 + premium on redemption 5% ₹ 1,50,000 = ₹ 4,50,000.

    ParticularsDr. (₹)Cr. (₹)
    Ginny Ltd. Dr.32,00,000
    Loss on Issue of Debentures A/c Dr.4,50,000
    To 8% Debentures A/c30,00,000
    To Premium on Redemption of Debentures A/c1,50,000
    To Bank A/c5,00,000
    (Being purchase consideration discharged)
    1½ marks

Answer: Assets ₹ 40,00,000 Dr. to Liabilities ₹ 6,50,000, Ginny Ltd. ₹ 32,00,000 and Capital Reserve ₹ 1,50,000; Ginny Ltd. ₹ 32,00,000 and Loss on Issue ₹ 4,50,000 Dr. to 8% Debentures ₹ 30,00,000, Premium on Redemption ₹ 1,50,000 and Bank ₹ 5,00,000

Where the marks are

  • Business taken over with capital reserve (1½ marks)
  • Discharge by debentures and cheque (1½ marks)

Revise the chapter

Practise this chapterBoard-style questions from Issue and Redemption of Debentures, one at a time, marked against the answer key and marking points.Back to the full paperSample paper 2024-25: every question, by section.

The question is transcribed from the official paper; figures are described in words. The solution, hints and chapter tag are ours. Spotted an error? Write tosupport@questionbuddy.in.