Following was the Balance sheet of DT Ltd. as on 30th June, 2018 :
|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|
|Interest Accrued thereon||45,000||BankBalance||7,000|
|Profit and Loss A/c||6,00,000|
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.
Calclllation of Purchase Consideration
|To Preference Shareholders:
25,000·Equity Shares of Rs. 10 each
|To Equity Shareholders :
`10/3xx12,000` Shares of Rs. each
In the Books DT Ltd.
|To Sundry Assets||18,70,000||By Liabilities :|
|Interest on Debentures||45,000|
|By T.D.Ltd .||6,50,000|
|By Equity Shareholders A/c (Loss)||1,75,000|
DT Equity Shareholders A/c
|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|
Journal of TD Ltd
|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)|
Balance Sheet as on 1st july 2018
|1.||Equity and Liabilities|
|(a) Share Capital||1||15,00,000|
|(b) Reserves and Surplus||2||-||15,00,000|
|Long Term Borrowings||2||5,00,000|
|(a) Fixed Ass|
|(i) Tangible As||3||12,50,000|
|(b) Trade Receivables||5||2,50,000|
|( c) Cash and Cash Equivalent||6||2,12,000||7,50,000|
Notes to Accounts
|15,000Equity Shares of Rs.100 each||15,00,000|
|2.||Long Tenμ Borrowings|
|6.||Cash and Cash Equivalent|