Page 105 - DCOM205_ACCOUNTING_FOR_COMPANIES_II

Accounting for Companies – II

notes Pass journal entries in the books of the company, assuming that the scheme has been put through
fully with the equity shareholders bringing in necessary cash to pay off the parties and to leave
a working capital of ` 20,000.
Also draw the Balance Sheet after reconstruction.
Solution

Journal of xyZ industries ltd.
Date particulars l.f. ` `
2006 June, 30 8% Preference Share Capital A/c Dr. 6,00,000

To Preference Shareholders’ A/c 4,20,000
To Reconstruction A/c 1,80,000
(As per the scheme of reconstruction Preference
shareholders agreed to take 70% of their claim)
Reconstruction A/c Dr. 33,600
To Preference Shareholders’ A/c 33,600
(As per the scheme of reconstruction, 70% of
preference dividend of ` 48,000 due to shareholders)
Preference Shareholders’ A/c Dr. 4,53,600
To Bank A/c 4,53,600
(Being payment of preference shareholders as per
scheme of reconstruction) 9% Debentures A/c Dr. 6,00,000
Interest on Debentures A/c Dr. 1,08,000
To 10% Debentures A/c 6,00,000
To Reconstruction A/c 1,08,000
(Being conversion of 9% debentures into
10% debentures and debenture-holders waive off
their claim on interest)

Bank Overdraft A/c Dr. 1,50,000
Sundry Creditors A/c Dr. 15,000
To Bank A/c 1,57,500
To Reconstruction A/c 7,500
(Being payment of bank overdraft and 50% of
interest accrued thereon)
Sundry Creditors A/c Dr. 69,000
To Bank A/c 65,550
To Reconstruction A/c 3,450
(Being payment of sundry creditors at 5% discount
as per scheme of reconstruction)
Reconstruction A/c Dr. 5,65,350
To Profit and Loss A/c 4,28,000
To Patents and Copyrights A/c 80,000
To Investments A/c 10,000

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