Page 19 - DCOM205_ACCOUNTING_FOR_COMPANIES_II

Accounting for Companies – II

notes m/s. r & co.
Balance sheet as on 30.9.2011
liabilities ` assets `
Creditors 50,000 Cash 6,000
Capitals: Bank 14,000
Ram 1,01,000 Debtors 60,000

Rahim 1,51,000 Less Provision for D/D 2,000 58,000
Rogers 1,33,000 3,85,000
Stock 42,000
Fixed Assets:
Written down value 3,00,000
Expenditure in Relation to R. Pvt .Ltd.
Formation expenses 12,000
Bank A/c in the name of R. Pvt. Ltd.: Deposit
of par value of 300 equity shares of ` 10 each
subscribed equally by Ram, Rahim & Rogers as
subscribers to the Memorandum and Articles of Association.
3000 15,000
4,35,000 4,35,000
On that day R. Ltd. took over the business for a total consideration of ` 5,00,000. The purchase
consideration was to be discharged by the allotment of equity shares of ` 10 each at par in the
profit-sharing ratio and 15% Debentures of ` 100 each at par for surplus capital.
The directors of R. Pvt. Ltd. revalued the fixed assets of R & Co. at ` 4,00,000. You are asked to:

(a) State the number of equity shares and debentures allotted by R. Pvt. Ltd. to Ram, Rahim
and Rogers.
(b) Show journal entries in connection with above transaction in the books of R. Pvt. Ltd. Show
your workings.
Solution
`

Total of assets taken over 4,32,000
– Creditors 50,000
Net Assets 3,82,000
Purchase consideration 5,00,000

Profit on sale of business/Capital Revenue 1,18,000
(a) statement of distribution of shares amongst partners
ram rahim rogers
` ` `
Balance of Capitals 1,01,000 1,51,000 1,33,000
Add: Profit on sale of business (in old ratio) 59,000 35,400 23,600
Balance of Capital (a) 1,60,000 1,86,400 1,56,600

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