Page 131 - DCOM205_ACCOUNTING_FOR_COMPANIES_II

Accounting for Companies – II

notes The committee of shareholders and creditors resolved as follows: (i) that the company will be
taken into voluntary liquidation and a new company will be formed with a nominal capital of
` 10,00,000 in shares of ` 10 each to take over the assets and liabilities of existing company,
(ii) that the item of goodwill be eliminated and machinery be valued at 20% less in the books of
the new company, (iii) that 75,000 shares of ` 10 each will be issued to the shareholders in the
old company @ ` 7.50 per share paid-up, (iv) the shareholders to pay up the balance of ` 2.50 per
share in cash, (v) the creditors of the company will be satisfied by the payment to them as half of
the amount in cash and by the issue of 5% Debentures as the other half.
Show the journal entries in the old company’s books to give the effect to the above. Also, show
the entries to open the books of the new company and opening balance sheet.
3. On 1 April, 2011 the Balance Sheet of Shital Co. Ltd. was as follows:
st
Liabilities ` Assets `
Share Capital: Goodwill 1,60,000
20,000 6% Preference Patents 60,000
Shares of ` 10 each fully paid 2,00,000 Fixed Assets 6,58,000
60,000 Equity Shares of ` 10 Cash 2,000
each fully paid 6,00,000 P&L A/c 1,12,000
6% Debentures 1,20,000 Preliminary Exps. 8,000
Creditors 80,000
(Preferences dividends in Arrears for four years)
10,00,000 10,00,000
A scheme of reconstruction was agreed upon as follows: (i) A new company to be formed called
New Shital Co. Ltd. with an authorised capital of ` 13,00,000 all in equity shares of ` 10 each,
(ii) One equity shares ` 5 paid, in new company to be issued for each equity shares in the old
company, (iii) Two equity shares, ` 5 paid in the new company to be issued for each preference
share in the old company, (iv) Arrears to be cancelled, (v) Debenture-holders to receive 12,000
equity shares in the new company credited as fully paid, (vi) Creditors to be taken up by the new
company, (vii) The remaining unissued shares to be taken up and paid for in full by the directors,
(viii) The company to take over the old company’s assets except patents, subject to writing
down sundry assets by ` 1,40,000 and (ix) Patents were realised by Shital Co. Ltd. for ` 4,000,
(x) Expenses of Shital Co. Ltd. Came to ` 4,000.

Close the books of Shital Co. Ltd. and open the books of New Shital Co. Ltd. by means of journal
entries and give the Balance Sheet of the New Shital Co. Ltd.
4. The books of Rajubai Limited showed the following balances on 31 March, 2011:
st
liabilities ` assets `
Share Capital: Patents 6, 00,000
Equity shares of ` 10 each 6, 00,000 Plant 2, 00,000

Creditors 7, 00,000 Stock 1, 50,000
Debtors 2, 50,000
Cash 6,250
Preliminary expenses 36,250
P&L A/c 57,500
13, 00,000 13,00,000

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