Pine International Ltd. was wound up on 31-3-18 and its summarised Balance Sheet as on that date was as follows: Note No. ₹ I. EQUITY & LIABILITIES (1) Shareholders' Funds: (a) Share Capital 1 12,00,000 (b) Reserves

CS Executive · Company Accounts & Auditing Practices · PYQS · December 2018
Pine International Ltd. was wound up on 31-3-18 and its summarised Balance Sheet as on that date was as follows: Note No. ₹ I. EQUITY & LIABILITIES (1) Shareholders' Funds: (a) Share Capital 1 12,00,000 (b) Reserves & Surplus 2 5,64,000 (2) Current Liabilities 3 4,86,000 Total 22,50,000 II. ASSETS (1) Non-Current Assets: Fixed Assets 9,64,000 (2) Current Assets 4 12,86,000 Total 22,50,000 Note 1: Share Capital : 1,20,000 Equity Shares ₹10 each fully paid up - 12,00,000 Note 2: Reserve and Surplus : Profit prior to incorporation - 42,000 Contingency Reserve - 2,70,000 Profit and Loss Account - 2,52,000 Total - 5,64,000 Note 3: Current Liabilities : Sundry Creditors - 2,26,000 Bills Payable - 40,000 Provision for Income Tax - 2,20,000 Total - 4,86,000 Note 4: Current Assets : Inventories - 7,75,000 Cash at Bank - 3,29,000 Sundry Debtors - 1,60,000 Less: Provision for Bad & Doubtful debt - 8,000 Bills Receivable - 30,000 Total - 12,86,000 Apple Ltd. took over the following assets at the value shown below : Fixed Assets - ₹12,80,000 Inventories - ₹7,70,000 Bills Receivables - ₹30,000 Purchase consideration was settled by Apple Ltd. as under: ₹5,10,000 of the consideration was satisfied by the allotment of fully paid 10% preference shares of ₹100 each. The balance was settled by issuing equity shares of ₹10 each, ₹8 per share paid up. Sundry Debtors realised ₹1,50,000. Bills payable was settled for ₹38,000. Income-tax authorities fixed the taxation liability at ₹2,22,000. Sundry creditors were finally settled with cash remaining after paying liquidation expenses of ₹8,000. You are required to: (i) Calculate the number of equity shares and preference shares to be allotted by Apple Ltd. in discharge of purchase consideration. (ii) Prepare the realisation account, cash at bank account, Equity Shareholder's account and Apple Ltd. account in the books of Pine International Ltd.

Answer & Explanation:

Calculation of Purchase Consideration Particulars ₹ Fixed Assets 12,80,000 Inventories 7,70,000 Bills Receivable 30,000 Total 20,80,000 Discharge of Purchase Consideration 10% 5100 Preference Shares @ ₹100 each = ₹5,10,000 Equity share Capital = ₹20,80,000 - ₹5,10,000 = ₹15,70,000 Number of Equity Shares = ₹15,70,000 / ₹8 paid up = 196250 shares Total = ₹20,80,000 Realisation A/c Particulars ₹ Particulars ₹ To Fixed Assets A/c 9,64,000 By Provision for Bad and Doubtful Debts A/c 8,000 To Inventories 7,75,000 By Bills Payable A/c 40,000 To Sundry Debtors A/c 1,60,000 By Sundry Creditors A/c 2,26,000 To Bills Receivable A/c 30,000 By Provision for Income Tax 2,20,000 To Bank A/c By Apple Limited (Purchase Consideration) 20,80,000 Liquidation Exp. 8,000 By Bank A/c 1,50,000 Bills Payable 38,000 Tax Liability 2,22,000 Sundry Creditors 2,11,000 To Equity Share Holder A/c 3,16,000 Total 27,24,000 Total 27,24,000 Cash at Bank A/c Particulars ₹ Particulars ₹ To Balance b/d 3,29,000 By Realisation A/c 1,50,000 To Realisation A/c Liquidation Expenses 8,000 Bills Payable 38,000 Tax Liability 2,22,000 Sundry Creditors (Bal. Fig) 2,11,000 Total 4,79,000 Total 4,79,000 Equity Share Holders A/c Particulars ₹ Particulars ₹ To 10% Pref. Shares in Apple Ltd. 5,10,000 By Equity Share Capital A/c 12,00,000 To Equity Shares in Apple Ltd. A/c 15,70,000 By Profit prior to incorporation 42,000 By Contingency Reserve A/c 2,70,000 By Profit and Loss A/c 2,52,000 By Realization A/c 3,16,000 Total 20,80,000 Total 20,80,000 Apple Ltd A/c Particulars ₹ Particulars ₹ To Realisation A/c 20,80,000 By Preference Share Capital A/c 5,10,000 By Equity Share Capital A/c 15,70,000 Total 20,80,000 Total 20,80,000

Topics: Company Accounts

Open in Interactive Practice Hub · Full Practice Hub · Chapter Weightage · More in this subject

Related Questions in this Topic