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Following Was the Balance Sheet of Dt Ltd. as on 30th June, 2018 : - Financial Accounting(Financial Accounting and Auditing 9)

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.

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Solution

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
Concept: External Reconstruction
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