50.1K

Verified Solution

Link Copied!

11:25 AO al 51% The summarized Balance Sheet of Srishti Ltd. as on 31st March, 2014 was as follows: Amount Liabilities Amount (5) Assets (5) 5,00,000 Equity Shares of 10 fully paid 30,00,000 Goodwill Export Profit Reserves 8,50,000 Tangible Fixed Assets 30,00,000 General Reserves 50,000 Stock 10,40,000 Profit and loss Account 5.50,000 Debtors 1,80,000 9% Debentures 5,00,000 Cash & Bank 2,80,000 Trade Creditors 1,00,000 Preliminary Expenses 50,000 50,50,000 50,50.000 Anu Ltd. agreed to absorb the business of Srishti Ltd. With effect from 1st April, 2014. (a) The purchase consideration settled by Anu Ltd. as agreed: 0 4,50,000 equity Shares of 10 each issued by Anu Ltd. by valuing its share @ 15 per share. (ii) Cash payment equivalent to 2.50 for every share in Srishti Ltd. (b) The issue of such an amount of fully paid 8% Debentures in Anu Ltd. at 96% as is sufficient to discharge 9% Debentures in Srishti Ltd. at a premium of 20%. (c) Anu Ltd. will take over the Tangible Fixed Assets at 100% more than the book value, Stock at 7,10,000 and Debtors at their face value subject to a provision of 5% for doubtful Debts. (d) The actual cost of liquidation of Srishti Ltd. was 75,000. Liquidation cost of Srishti Ltd. is to be reimbursed by Anu Ltd. to the extent of 50,000. (e) Statutory Reserves are to be maintained for 1 more year, You are required to: Close the books of Srishti Ltd. by preparing Realisation Account, Anu Ltd. Account Shareholders Account and Debenture Account, and (ii) Pass Journal Entries in the books of Anu Ltd. regarding acquisition of business (Group I-Practice Manual)

Answer & Explanation Solved by verified expert

See Answer