U Ltd. suffered continuous losses. Its balance sheet as on 31-3-2016 was as follows: Particulars Amounts (₹) I. Equity and Liabilities: (1) Shareholder Fund (a) Share Capital Authorised, issued and subscribed capital: 30

U Ltd. suffered continuous losses. Its balance sheet as on 31-3-2016 was as follows: Particulars Amounts (₹) I. Equity and Liabilities: (1) Shareholder Fund (a) Share Capital Authorised, issued and subscribed capital: 30,000 equity shares of ₹10 each fully paid up 3,00,000 2000, 8% cumulative preference shares of ₹100 each fully paid 2,00,000 (b) Reserve and Surplus: (i) P & L Account (2,00,000) (ii) Securities Premium 90,000 (2) Non-current liabilities: (a) Long-term borrowings unsecured loan (from director) 50,000 (3) Current Liabilities: (a) Trade Payables Sundry Creditors 3,00,000 Outstanding Exps. (including directors remuneration of ₹20,000) 70,000 Total 8,10,000 II. Assets: (1) Non-current assets: (a) Fixed Assets (i) Tangible Plant 3,00,000 Loose Tools 10,000 (ii) Intangible Assets Goodwill 50,000 (b) Other non-current assets preliminary expenses 5,000 (2) Current Assets: (a) Inventories 1,50,000 (b) Trade Receivable: Debtors 2,50,000 (c) Cash and cash equivalents: Cash 10,000 Bank 35,000 Total 8,10,000 Note: Dividends on preference shares are in arrears for three years. The following scheme of reconstruction has been agreed upon and duly approved by the court on April 1, 2016. (A) Equity shares to be converted into 1,50,000 shares of ₹2 each. (B) Equity shareholders to surrender 90% of their holding to the company. (C) Preference shareholders forego arrears of dividend and in lieu thereof the rate of 8% to be increased to 9% in future. (D) Sundry creditors agree to reduce their claims by one-fifth in consideration of their getting shares of ₹35,000 of the surrendered equity shares. (E) Directors forego their loan and remuneration. (F) Assets are worth: Plant ₹2,60,000, loose tools ₹2,000, debtors ₹2,35,000 and stock ₹1,30,000. (G) Expenses of reconstruction amounted ₹10,000. (H) Any surplus remaining after meeting the losses and expenses should be utilised in further reducing the value of plant. (I) To provide working capital, all existing members to subscribe 50,000 equity shares. Give journal entries to implement the above scheme.