Sico Ltd. took over the assets of Rs. 4,80,000 and liabilities of Rs. 80,000 of Mittal Ltd. for a consideration of Rs. 3,20,000. Rs. 20,000 were paid by an acceptance in favour of Mittal Ltd. payable after 3 months and the balance by issue of fully paid-up 8% Preference Shares of Rs. 100 each at a premium of 50%. Pass the necessary Journal entries for the above transactions in the books of Sico Ltd.

Sico Ltd. took over the assets of Rs. 4,80,000 and liabilities of Rs.

1.	Sico Ltd. took over the assets of Rs. 4,80,000 and liabilities of Rs. 80,000 of Mittal Ltd. for a consideration of Rs. 3,20,000. Rs. 20,000 were paid by an acceptance in favour of Mittal Ltd. payable after 3 months and the balance by issue of fully paid-up 8% Preference Shares of Rs. 100 each at a premium of 50%. Pass the necessary Journal entries for the above transactions in the books of Sico Ltd.
Answer» (i) Dr. Sundry Assets A/c - Rs. 4,80,000, Cr. Sundry Liabilities A/c - Rs. 80,000, Mittal Ltd. - Rs. 3,20,000 and Capital Reserve A/c (Balancing Figure) - Rs. 80,000. (ii) Dr. Mittal Ltd. - Rs. 3,20,000, Cr. Bills Payables A/c - Rs. 20,000, 8% Preference Share Capital A/c - Rs. 2,00,000 and Securities Premium Reserve A/c - Rs. 1,00,000. Note: No. Preference Shares to be issued = Rs. 3,00,000/Rs. 150 = 2,000 Preference Shares.

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