The following is the balance sheet of M/s P & Q as on 31 March 2011:
|
Liabilities |
Assets |
||
|
Sundry Creditors |
80,000 |
Land & Building |
4,00,000 |
|
Mrs. P”s Loan |
3,60,000 |
Plant & Machinery |
3,20,000 |
|
Capital Accounts |
Stock in Trade |
1,20,000 |
|
|
P:4,80,000 |
Sundry Debtors |
2,00,000 |
|
|
Q:3.20.000 |
8,00,000 |
Investments |
1,60,000 |
|
Cash at Bank |
40,000 |
||
|
12,40,000 |
[2,40,000 |
Profits were shared as two-thirds to P and one- thirds to Q. On 1 April 2011, PQ Ltd. purchased the business of M/s P & Q for a payment of Rs.12,00,000 to be made in the form of equity shares of Rs.100 each credited as Rs.80 paid. The company did not take over the investments and Mrs. P’s loan. The company also decided to revalue land and buildings as Rs.5,40,000, plant and machinery at Rs.2,80,000; and to create a provision of doubtful debts at 5% on debtors. There was a claim by a worker for Rs.12,000 for injuries in an accident. The company decided to admit the claim. Out of the investments, Rs.24,000 worth are worthless. Mrs. P. agrees to receive the remaining investments and 2,800 shares of PQ Ltd. in settlement of her loan. The company decides to retain the books of account of the firm. Journalise.