Model: Journal entries in the books of transferee company—amalgamation in the nature of merger On 31 March 2011, the balance sheet of AX Ltd stood as follows:
|
Liabilities |
Assets |
||
|
Share Capital: |
Plant & Machinery |
8,05,000 |
|
|
75,000 Equity Shares of Rs.10 Fully Paid |
7,50,000 |
Furniture & Fixtures |
97,200 |
|
Securities Premium |
75,000 |
Stock |
3,52,750 |
|
General Reserve |
3,12,750 |
Debtors |
99,220 |
|
Profit & Loss A/c |
92,650 |
Cash at Bank |
56,600 |
|
Creditors |
1,80,370 |
||
|
14,10,770 |
14,10,770 |
On this date AX Ltd. took over the business of BY Ltd. for Rs.3,30,000 payable in the form of its fully paid equity shares of Rs.10 each at par. Shareholders of BY Ltd. get 110 shares of AX Ltd. for every 100 shares held in BY Ltd. The scheme of amalgamation also provided that 1,500 12% debentures of BY Ltd. would be converted into equal number of 14% debentures of AX Ltd. of Rs.100 each. The balance sheet of BY Ltd. on the date of amalgamation was as follows:
|
Liabilities |
Rs. |
Assets |
Rs. |
|
Share Capital: |
Machinery |
2,75,000 |
|
|
30,000 Equity Shares of Rs.10 Each Fully |
3,00,000 |
Furniture |
67,600 |
|
Paid |
Stock |
1,57,900 |
|
|
Capital Reserve |
6,500 |
Debtors |
64,650 |
|
Foreign Projects Reserve |
4,850 |
Cash at Bank |
37,180 |
|
General Reserve |
37,675 |
||
|
Profit & Loss A/c |
12,065 |
||
|
1,50012% Debentures of Rs. 100 Each |
1,50,000 |
||
|
Creditors |
91,240 |
||
|
6,02,330 |
6,02,330 |
You are required to pass journal entries in the books of AX Ltd. assuming that the amalgamation is in the nature of merger.