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Prepare general journal entries in the books of smelliot ltd

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Reference no: EM132966797

Elliot forms a company, Smelliot Ltd, to take over his business as a going concern. The consideration for the sale of the business is 500,000 shares issued at $1.00 each and $300,000 in cash.

The assets and liabilities (in $) of the business were:

Freehold Land and Buildings 400,000

Plant and Equipment 150,000

Motor Vehicles 74,000

Inventory 164,000

Accounts Receivable 125,000

Allowance for Doubtful Debts 15,000

Accounts Payable 115,000

All assets and liabilities are at fair value except accounts receivable that are expected to realise $100,000.

Required:

Problem 1: Prepare the general journal entries in the books of Smelliot Ltd to record the purchase of the business and discharge of the purchase consideration. Cash transactions are to be recorded in the general journal.

Reference no: EM132966797

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