Solution
Exe Ltd. purchased the assets of the book value Rs. 4,00,000 and took over the liabilities of Rs. 50,000 from Mohan Bros. It was agreed that the purchase consideration, settled at Rs. 3,80,000 be paid by issuing debentures of Rs. 100 each. Pass journal entries if debenture is issued: (a) at par (b) at a discount of 10% and (c) at a premium of 10%. It was agreed that any fraction of debentures be paid in cash.