Model: Absorption—Dissenting shareholders AB Ltd. agrees to absorb CD Ltd. on the [img] basis of the following balance sheet ason 31 March 2011
|
Liabilities |
Assets |
||
|
Share Capital: |
Land & Buildings |
1000 |
|
|
Authorized: 100,000 Shares of Rs. 50 Each |
10,000 |
Machinery |
400 |
|
Issued and Subscribed: |
Stock |
1400 |
|
|
1,60,000 Shares of ,T. 50 Each |
8,000 |
||
|
Called-up & Paid-up Capital: |
|||
|
1,60,000 Shares of ,T. 50 Each Rs. 30 Called |
4,800 |
Sundry Debtors: 1,840 |
|
|
& Paid |
Less: Provision for Bad Debts: 80 |
1,760 |
|
|
Reserves |
1,000 |
Cash at Bank |
240 |
|
Profit & Loss A/c |
480 |
||
|
Creditors |
600 |
||
|
6,880 |
6,880 |
AB Ltd. took over all the assets and liabilities of CD Ltd. subject to the retention of Rs.120 thousand cash to provide for costs of liquidation, and to satisfy the dissenting shareholders.
The consideration for the sale is the allotment of one share of Rs.100 (Rs. 50 paid up) in AB Ltd. for every two shares in CD Ltd. The market value of the Rs.50 paid-up share of AB Ltd. on that date was Rs.70 per share.
The liquidator of CD Ltd. has paid out of Rs.120 thousand retained, the cost of liquidation of Rs.60 thousand and dissenting shareholders of 800 shares at Rs.32.50 per share totaling 26,000.
You are required to prepare ledger accounts in the books of CD Ltd. and give journal entries in the books of AB Ltd.