Two companies A Ltd. and B Ltd. amalgamate and form a new company C Ltd. The position of two companies is as follows:
A Ltd.
|
Liabilities |
Assets |
||
|
Paid-up Capital: |
Goodwill |
2,10,000 |
|
|
90,000 Equity |
9,00,000 |
Stock |
5,40,000 |
|
Shares of Z 10 |
Debtors |
6,00,000 |
|
|
Each |
|||
|
Profit and Loss |
1,50,000 |
||
|
A/c |
|||
|
5% Debentures |
2,10,000 |
||
|
Sundry Creditors |
90,000 |
||
|
13,50,000 |
13,50,000 |
B Ltd.
|
Liabilities |
Assets |
||
|
Paid-up Capital: |
Goodwill |
2,40,000 |
|
|
60,000 Equity |
6,00,000 |
Debtors |
6,60,000 |
|
Shares of Rs. 10 |
|||
|
Each |
|||
|
Profit & Loss A/c |
1,26,000 |
||
|
Sundry Creditors |
1,74,000 |
||
|
9,00,000 |
9,00,000 |
The average profits of A Ltd. and B Ltd. have been Rs.90,000 and Rs.60,000, respectively. C Ltd. agrees to take over both the concerns for a sum of Rs.18,00,000 and in addition to discharge all liabilities; Rs.3,00,000 to be paid in cash and the balance in shares at face value.
It is agreed that before being taken over by C Ltd., the debtors of A Ltd. and B Ltd. will be written off to the extent of 10% of their respective book figures.
The profit on conversion is to be divided between the shareholders of A Ltd. and B Ltd. in the same proportion as to the profits previously earned by them.
Draw up the purchases A/c on the completion of the transfer in the book of C Ltd. Also show how the share capital Accounts in A Ltd. and B Ltd. should be closed.