A company purchased a running business from m/s rai brother for a sum of 1500 000 payable 1200 000 is fully paid shares of 10 each and balance through cheque plant and building 400000 stock 400000 building 400000 cash 300000 sundry debenture 300000 sundry creditors 200000 you are required to pass journal entry in the company book?

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Answer

Journal Entry for Purchase of Business from M/s Rai Brother

The journal entry for the purchase of a running business from M/s Rai Brother for a sum of 1500,000 can be recorded as follows:

1. Purchase of Business Account Dr 1,500,000
To M/s Rai Brother's Account 1,500,000

2. Share Capital Account Dr 1,200,000
To Bank Account 1,200,000

3. Plant and Building Account Dr 400,000
Stock Account Dr 400,000
To Cash Account 300,000
To Sundry Debenture Account 300,000
To Sundry Creditors Account 200,000

Explanation:
- The purchase of the business is debited to the Purchase of Business Account and credited to M/s Rai Brother's Account for 1,500,000.
- The amount paid through fully paid shares of 10 each (1,200,000) is debited to Share Capital Account and credited to Bank Account.
- The remaining balance paid through cash (300,000) is debited to Cash Account.
- The assets acquired (Plant and Building, Stock) are debited to their respective accounts.
- The liabilities assumed (Sundry Debenture, Sundry Creditors) are credited to their respective accounts.

By recording the above journal entries, the company reflects the acquisition of the business and the corresponding financial impact on its books.

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