Question

Following was the Balance sheet of DT Ltd. as on 30th June, 2018 :

Liabilities	Rs	Assets	Rs
Share Capital:		Goodwill	25,000
2,500 8% CumulativePreference Shares of Rs 100 each		Fixed Assets	12,85,000
12,000 Equity Shares of Rs. 100 each		Stock	3,,03,000
9% Debentures		Debtors	2,50,000
Interest Accrued thereon	45,000	BankBalance	7,000
Creditors	5,00,000	Prelhninary Expenses	25,000
		Profit and Loss A/c	6,00,000
	24,95,000		24,95,000

Note : Preference dividend was in arrears RS.40,000.
The following Scheme of reconstruction is duly sanctioned :
1. A new company TD Ltd .is formed With Rs .15,00,000 as authorised share capital divided into 1,50,000 equity shares of Rs. 10 each.
2. The company will acquire DT Ltd. on the following conditions : 
(i) Old companies debentures will be paid by similar debentures in the new company. For arrears of interest, equivalent amount of·equity shares will be issued .
(ii) The cr~ditors ·wlll be paid fof. every Rs 100 for their claim, Rs .16 in cash and 10 equity shares equivalent in the new company.
(iii) Preference shareholders are pfild 10 equity shares in the new company for  each shares held.by them in the old company. They will not press-for their dividend arrears.
(iv) Equity shareholders will be given ten equity shares in the new company. for three shares held in the old company.
(v) Expenses. of Rs. 20,000 will be borne. by the new company, as a part of purchase consideration..
3. The riew company will take the current assets at their book value except stock which will be reduced by Rs.15,000. Intangible assets are not to appear in the new Balance Sheet, appropriate adjustment being made in the values of fixed assets ..
4. Remaining equity shares in the new company are issued to the public and are fully paid.
You are required to prepare:
1. In the books ·of DT Ltd :
(i) Realisation Account
(ii) DT Equity Sharehoiders Account.
2. In the books of TD Ltd. 
(i) Journal Entries .
(ii) Balance Sheet.
Under Purchase Method.

Answer 1

Calclllation of Purchase Consideration

	Rs.
To Preference Shareholders: 25,000·Equity Shares of Rs. 10 each	2,50,000
To Equity Shareholders : `10/3xx12,000` Shares of Rs. each	4,00,000
	6,50,000

In the Books DT Ltd.
Realisation A/c

Particulars	Rs	Particulars	Rs
To Sundry Assets	18,70,000	By Liabilities :
		9% Debentures	5,00,000
		Interest on Debentures	45,000
		Creditors	5,00,000
		By T.D.Ltd .	6,50,000
		By Equity Shareholders A/c (Loss)	1,75,000
	18.70.000		18.70.000

DT Equity Shareholders A/c

Particulars	Rs	Particulars	Rs
To Preliminary Expenses	25,000	By Equity Share Capital	12,00,000
To Profit & Loss A/c	6,00,000
To Realisation (Loss)	1,75,000
To Equity Shares jn TD Ltd.	4,00,000
	12,00,000		12,00,000

Journal of TD Ltd

		Dr.	Cr.
1.	Business Purchase A/c          Dr.	6,50,000
	To Liquidator of DT Ltd.		6,50,000
	(Being purchase consideration due)
2.	Stock A/c                              Dr.	2,88,000
	Debtors A/c                          Dr.	2,50,000
	Bank A/c                              Dr.	7,000
	Fixed Assets A/c                  Dr.	12,30,000
	To 9% Debentures A/c		5,45,000
	To Creditors A/c		5,80,000
	To Business Purchase A/c		6,50,000
	(Being assets & liabilities taken over, balance being fixed assets)
3.	Liquidator of DT Ltd. A/c      Dr.	6,50,000
	To Equity Shares Capital A/c		6,50,000
	(Being purchase consideration discharged)
4.	Bank A/c                            Dr.	3,05,000
	To Equity Share Capital A/c		3,05,000
	(Being received for amount issue  of remaining shares to Public)
5.	9% Debentureholdei of DT Ltd. A/c                                     Dr	5,45,000
	To 9% Debentures A/c		5,00,000
	To Equity Share capital A/c		45,000
	(Being debentureholder' s claim settled)
6.	Creditors A/c                        Dr.	5,80,000
	To Cash A/c		80,000
	To Equity Share Capital A/c		5,00,000
	(Being Creditors Account settled)
7.	Goodwill A/c                        Dr.	20,000
	To Cash A/c		20,000
	(Being paid for realisation expenses)

TD Ltd.
Balance Sheet as on 1st july 2018

	Particulars	Notes No.	Dr.	Cr.
1.	Equity and Liabilities
1.	Shareholders Funds
	(a) Share Capital	1	15,00,000
	(b) Reserves and Surplus	2	-	15,00,000
2.	Non-current Liabilities
	Long Term Borrowings	2		5,00,000
	Total			20,00,000
2.	Assets
1.	Non-Current Assets
	(a) Fixed Ass
	(i) Tangible As	3		12,50,000
2.	Current Assets
	(a) Inventories	4	2,88,000
	(b) Trade Receivables	5	2,50,000
	( c) Cash and Cash Equivalent	6	2,12,000	7,50,000
	Total			20,00,000

Notes to Accounts

	Particulars	Rs.
1.	Share Capital
	15,000Equity Shares of Rs.100 each	15,00,000
2.	Long Tenμ Borrowings
	9% Debentures	5,00,000
3.	Tangible Assets
	Fixed Assets	12,50,000
4.	Inventories
	Stock	2,88,000
5.	Trade Receivables
	Debtors	2,50,000
6.	Cash and Cash Equivalent
	Bank Balance	2,12,000