The following was the balance sheet of ABC Ltd. as on 31 March 20…. :
|
Liabilities |
Assets |
||
|
Share Capital: |
Goodwill |
2,40,000 |
|
|
12,000 7% |
12,00,000 |
Land & Buildings |
6,00,000 |
|
Preference |
Plant & |
12,00,000 |
|
|
Shares of Rs. 100 |
Machinery |
||
|
Each |
|||
|
16,000 Equity |
16,00,000 |
Patents |
1,20,000 |
|
Shares of Rs. 100 |
Stock |
8,80,000 |
|
|
Each |
Sundry Debtors |
6,00,000 |
|
|
Profit Prior to |
40,000 |
Cash at Bank |
20,000 |
|
Incorporation |
|||
|
6% Debentures |
12,00,000 |
Preliminary |
1,00,000 |
|
Expenses |
|||
|
Sundry Creditors |
8,00,000 |
P&L A/c |
1080000 |
|
48,40,000 |
4840000 |
The following scheme of reconstruction was duly approved:
- 7% Preference shares be converted into 9% preference shares, the amount being received by 30%.
- Equity shares be reduced to fully paid shares of Rs.50 each.
- Land & buildings be appreciated by 20%.
- Debentures be reduced by 20%.
- All intangible assets, fictitious assets including patents and accumulated losses be written off. Utilize profit prior to incorporation, if necessary.
- Equity shareholders to subscribe equity shares of Rs.4,00,000.
The amount is to be utilized for acquiring new plant & machinery assuming the whole scheme to have been put through. Give journal entries and prepare the resultant balance sheet.