Question

On 1st July, 2017 the balance sheet of Amrit Limited was as under:

Liabilities	Rs.	Assets	Rs.
Authorised and Issued Capital :		Goodwill	1,00,000
3,000 6% Cumulative Preference	75,000	Sundry Assets	2,50,000
Shares of Rs25 each fully paid		Cash	10,000
8,000 Equity Shares of Rs 50 each fully paid	4,00,000	Profit and Loss A/c	1,90,000
60 % Debentures	50,000
Creditors	25,000
	5,50,000		5,50,000

Preference dividends. were in arrears for two years. A scheme of  reconstruction agreed upon was as under :

(1) A.new· company to be formed, called AmritLiinited with an authorised capital of Rs.5,00,000  an in equity shares of Rs. 100 each.
(2) One equity shar.e of Rs.100 each fully paid in ·the new company to be issued in exchange of 3 preference shares in the old company. 
(3) One equity share of Rs. 100 each fully paid in the new company to be exchanged for 4 equity shares In the old company.
(4) Arrears of preference dividend to be cancelled.
(5) Debentureholders to receive 50 equity shares in the new company as fully paid.
(6) Creditors to be taken over by the new company and immediately paid-off 
(7) The new company to issue remaining equity shares. for public subscription.
(8) The new company to take over old companis assets,subject to revaluation of  'Sundry Assets' at Rs. 2,65,000.
Prepare the  necessary ledger account in the books of Amrit Limited  and open the books of the new company by means of journal entries, assuming that the public subscription was fully responded.

Answer 1

Books of-Mis Arnrit Limited
Realisation A/C

Particulars	Rs.	Particulars	Rs.
To Goodwill	1,00,000	By Creditors	25,000
To Sundry Assets	2,50,000	By Mis Amrit Ltd A/c	3,50,000
To Cash	10,000
To Equity Shareholders A/C	15,000
	3,75,000		3,75,000

Preferenec Shareholders A/c

Particulars	Rs.	Particulars	Rs.
To Shares in Mis Amrit Ltd.A/c	1,00,000	By Pref. Share Capital A/c	75,000
		By Equity Shareholders A/c	25,000
	1,00,000		1,00,000

Equity Shareholders A/c

Particulars	Rs.	Particulars	Rs.
To Profit and Loss A/c	1,90,000	By Equity Share Capital A/c	4,00,000
To. Pref. Shareholders A/c (Loss)	25,000	By Realisation A/c (Profit)	15,000
To Shares in M/s Amrit Ltd.A/C	2,00,000
	4,15,000		4,15,000

Journal of M/s Amrit Limited

No.	Particulars		Debit Rs	Credit Rs
1.	Goodwill A/c                 Dr
	Sundry Assets A/c         Dr
	cash A/c                        Dr
	To Creditors A/c
	To Liquidators of M/c Amrit Ltd. A/c
	(Being the business of M/c. Amrit Ltd is taken over)
2.	Liquidators of Mis ·Amrit Ltd. A/c                        Dr		3,50,000
	To Equity Share Capital A/c			3,50,000
	(Being purchase consideration discharged by the issue of 3,500 equity shares at Rs.100 each fully paid)
3.	Cash A/c		1,50,000
	To Equity Share Capital A/c			1,50,000
	(Being issue of remaining 1,500 equity shares)
4.	Creditors A/c                 Dr		25,000
	To Cash/Bank A/c			25,000
	(Being cash paid to creditors)