The following is the balance sheet of self-injured company as on 31 March 20…. :
|
Liabilities |
Assets |
( in 000″s) |
|
|
Equity Share |
17,50,000 |
Fixed Assets |
37,50,000 |
|
Capital @ |
Current Assets |
87,50,000 |
|
|
Z 2,500 Each |
|||
|
Fully Paid up |
|||
|
500, 12% |
2,50,000 |
P&L A/c |
7,50,000 |
|
Preference |
|||
|
Shares of |
|||
|
Z 500 Each |
|||
|
10% |
7,50,000 |
||
|
Debentures |
|||
|
Current |
97,50,000 |
||
|
Liabilities |
|||
|
Provision for |
7,50,000 |
||
|
Taxation |
|||
|
1,32,50,000 |
1,32,50,000 |
The following scheme of reconstruction is sanctioned:
- Fixed assets are to be written down to Rs.25,00,000.
- Current assets are to be revalued at Rs.67,50,000.
- Preference shareholders agree to forego their right to arrears of dividend which are in arrears for 3 years.
- One of the creditors of the company, to whom the company owes Rs.62,50,000 agree to forego one-half of this claims. He is allotted 10,000 equity shares of Rs.25 each in part satisfaction of the balance of his claim.
- The taxation liability of the company is settled at Rs.10,00,000.
- The rate of interest on debentures is raised to 12%. The debenture holders surrender their existing debentures of Rs.5,000 each and exchange the same for fresh debentures of Rs.3,750 each.
- All existing shares are reduced to Rs.25 each.
- All preference shares are reduced to Rs.375 each.
Make journal entries and thereafter prepare the balance sheet.