Candidates who attempted this question performed poorly. Candidates prepared the Balance Sheet correctly but they could not prepare the Journal entries in a way it should be prepared.
Some of the expected items in the journal entries were
(i) Purchase consideration should be
Debit Assets account
Credit Vendor account
(ii) Assets taken over:
Debit Assets account
Credit purchase account
(iii) Liabilities taken over
Debit Purchase account
Credit liabilities account
(iv) Purchase price:
Debit Vendor account
Credit Bank account.
