The ledger balances of X Ltd. on 31 December 20… were as follows:
|
25,000 Equity Shares of Rs.100 Each |
25,00,000 |
|
12,500, 10% Preference Shares of Rs.100 Each |
12,50,000 |
|
Preference Dividend in Arrears |
1,50,000 |
|
Creditors |
6,25,000 |
|
Fixed Assets |
25,00,000 |
|
Current Assets |
8,12,000 |
The following scheme of reconstruction was adopted:
- The fixed assets were valued at Rs.15,00,000 and current assets at Rs.6,25,000
- The equity shares were sub-divided into shares of Rs.5 each fully paid and 90% of these shares were surrendered
- The total claims of preference shareholders were reduced to Rs.6,25,000 and in consideration of this, they were allotted equity shares, out of surrendered shares amounting to Rs.3,12,500
- The creditors agreed to reduce their claims to Rs.3,75,000, one-third of which was to be satisfied by the issue of equity shares out of those surrendered
- The remaining surrendered shares were cancelled
Pass journal entries and give the balance sheet after re-construction.