Q.

What journal entry will be passed when purchase consideration is equal to net assets while purchasing business from vendor?

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a

Sundry assets a/c __________ Dr

Goodwill a/c __________ Dr

b

Capital Reserve a/c _________ Dr

To vendor’s a/c.

c

Sundry assets a/c __________ Dr

To capital Reserve a/c

 To vendor’s a/c

d

Sundry assets a/c __________ Dr

 To sundry liabilities a/c

To vendor’s a/c.

answer is C.

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Detailed Solution

When the purchase consideration is equal to net assets while purchasing  business from vender the asset Account is debited and vendor account is credited.

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What journal entry will be passed when purchase consideration is equal to net assets while purchasing business from vendor?