3.
The following is the Balance Sheet of Sandeep Limited as on 31st March 2006
Liabilities Rs Assets Rs
Issued and Subscribed Capital: Goodwill 25,000
10% Preference Shares of Rs. Patents 15,000
100 each 4,00,000 Furniture 35,000
Equity Shares of Rs. 10 each 10,00,000 Plant and Machinery 6,00,000
12% Debentures 7,50,000 Land and Building 6,50,000
Bank Overdraft 50,000 Stock in Trade 80,000
Sundry Creditors 1,40,000 Sundry Debtors 90,000
Bills Payable 35,000 Bills receivable(Trade) 15,000
Profit and Loss a/c 8,20,000
Preliminary Expenses 45,000
23,75,000 23,75,000
Additional Information:
The Preference dividend is in arrear for four years. The following scheme of capital reduction was
sanction by the court agreed by shareholder
1.the preference shares are to be reduced to Rs. 50/- each and equity shares to Rs. 2 each both being
fully paid
2. Of the preference dividend in arrears three-fourth to be waived and remaining to be paid in cash
3. The debenture holder to take over plant and machinery at Rs. 6,50,000 in part satisfaction of their
claim. The remaining claim should be converted into 14% debenture.
4. Creditors agreed to reduce their claim by Rs. 20,000. Bills payable to be paid immediately
5. Goodwill, patents, Profit and Loss a/c and Preliminary expenses are to be written off entirely.
6. the following assets are to be revalued as under: Furniture Rs. 25,000; Stock in Trade Rs. 68,000;
Land and Building Rs. 5,80,000; Sundry Debtors Rs. 80,000
7. A secured Loan of Rs. 1,50,000 at 12% per annum is to be obtain by mortgaging Land and Building
for repayment of Bank overdraft, bills payable and reconstruction expenses Rs. 15,000
Pass Journal entries to record above scheme and draft the balance sheet of Sandeep Limited
