M/s Shiva Co. Ltd. was floated with a capital of Rs.10,00,000 in 50,000 equity shares of 10 each and 50,000 preference shares of Rs.10 each and the capital was fully subscribed and paid. The preference shares carried cumulative preference rights as to dividend but not as to capital repayment. The company was unsuccessful and sustained trading losses amounting to Rs.1,50,000. In addition, the majority of the patents acquired by the company proved to be worthless. It was resolved to write off Rs.5,00,000 of the subscribed capital by reducing each class of shares by Rs.5 per share and to reduce the assets correspondingly by:
- Wiping out the debit balance of P&L A/c Rs.1,50,000
- Writing down goodwill to the extent of Rs.1,50,000
- Writing off patents by Rs.1,50,000 and preliminary expenses of Rs.50,000
Pass the journal entries to give effect to the above transactions.