Following is the balance sheet of W Ltd. as on 31 March 20…:
|
Liabilities: |
|
|
2,00,000 Equity Shares of Rs.10 Each, Fully Paid up |
20,00,000 |
|
6,000, 12% Preference Shares of Rs.100 Each Paid up |
6,00,000 |
|
11% Debentures |
6,00,000 |
|
Interest Outstanding on Debentures |
66,000 |
|
Loan from Bank (Including Interest Due) |
1,72,800 |
|
Creditors |
1,09,000 |
|
35,47,800 |
|
|
Assets: |
|
|
Machinery |
17,40,000 |
|
Furniture |
2,00,000 |
|
Patents & Copyrights |
80,000 |
|
Investments (Market Value Rs.55,000) |
65,000 |
|
Stock |
6,00,000 |
|
Debtors |
4,39,000 |
|
Cash at Bank |
15,800 |
|
P&L A/c |
4,08,000 |
|
35,47,800 |
Note: Preference dividend is in arrears for 2 years.
The following scheme of reconstruction has been agreed upon and duly approved by the Court:
- The existing equity shares are converted into equal number of fully paid equity shares of Rs.7 each. The equity shareholders also agree to take up 1,00,000 new equity shares of Rs.7 each, the total amount being paid by them immediately.
- The preference shareholders agree to forego arrears of dividend and accept 85% of their capital account by way of redemption of all the preference shares.
- The debenture holders agree to give up their claim to outstanding interest in consideration of the rare of interest on debentures being enhanced to 13.5%.
- Bank agrees to waive its claim to outstanding interest amounting to Rs.12,800 provided the balance of loan Rs.1,60,000 be paid off forth with.
- Investments are to appear at market value.
- Patents and copyrights are to be written off completely.
- Machinery is to be written down to the extent possible after writing off all other losses.
Pass journal entries necessary to implement the above-mentioned scheme and prepare the balance sheet of the company in the prescribed form immediately after the implementation of the scheme.