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Assignment 5

The document outlines a balance sheet for Weak Ltd and proposes several revisions including reducing share values and claims, writing off assets, and providing for bad debts to reconstruct the company's balance sheet. Journal entries are to be passed to record the effects of the reconstruction scheme.

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Siva Sankari
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137 views1 page

Assignment 5

The document outlines a balance sheet for Weak Ltd and proposes several revisions including reducing share values and claims, writing off assets, and providing for bad debts to reconstruct the company's balance sheet. Journal entries are to be passed to record the effects of the reconstruction scheme.

Uploaded by

Siva Sankari
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Problem.No.

The following is the balance sheet of Weak Ltd., on 31-3-2003


Liabilities Rs. Assets Rs.
20,000 Equity shares of Rs.10 each 2,00,000 Patents 40,000
500 10% Pref. Shares of Rs.100 each 50,000 Buildings 2,00,000
8% Debentures 1,00,000 Machinery 1,30,000
Creditors 3,30,000 Stock 80,000
Outstanding expenses 20,000 Debtors 55,000
Profit & loss A/c 1,95,000
7,00,000 7,00,000

With a view to reconstruct the company, it is proposed:


(i) To reduce Equity share paid up amount by Rs.9 each.
(ii) To reduce 20% Preference shares by Rs.40 each.
(iii) To reduce 8% Debentures by 10%.
(iv) To reduce Trade creditors’ claim by one Third.
(v) To reduce machinery by Rs.60,000.
(vi) To reduce inventory by Rs.10,000.
(vii) To provide Rs.15,000 for bad debts.
(viii) To write off all the intangible assets.
Pass journal entries to give effect to the above scheme and show the company’s balance sheet
after reconstruction.

Problem.No.2
The following is the summarized balance sheet of X ltd., as on 31 st March 2012

Liabilities Rs Assets Rs
12,000 10% Preference Shares of Rs 100 Goodwill 90,000
each 12,00,000 Land & Building 12,00,000
24,000 Equity Shares of Rs 100 each 24,00,000 Machinery 18,00,000
10% Debentures 6,00,000 Stock 2,60,000
Bank overdraft 6,00,000 Debtors 2,80,000
Sundry Creditors 3,00,000 Cash 30,000
Profit & Loss A/c 14,40,000
51,00,000 51,00,000
 The equity shares are to be reduced to shares of Rs.40 each fully paid and the preference shares to be
reduced to fully paid shares of Rs.75 each
 The debenture holders took over stock and debtors in full satisfaction of their claims.
 The land and building to be appreciated by 30% and plant and machinery to be depreciated by 30%.
 The debit balance of profit and loss account and intangible assets are to be eliminated.
 Expenses of reconstruction Rs.5,000

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