Q1.

The Balance sheet as on 31st March,2003 of X Ltd and Y Ltd are as under:
Balance Sheet
X Ltd. Y Ltd. X Ltd. Y Ltd.
Liabilities Rs. Rs. Assets Rs. Rs.
Fixed Assets:
Share Capital of Rs 10 each fully paid up 500,000 300,000 Buildings 250,000 155,000
12% Preference Share of Rs.100 each 220,000 170,000 Machineries 325,000 170,000
General reserve 80,000 55,000 furnitures 57,500 35,000
Profit and Loss A/C 75,000 50,000 Investments 70,000 50,000
Current
14% Debentures 50,000 35,000 Assets:
Creditors 75,000 50,000 Stock 125,000 95,000
Debtors 90,000 103,000
Bank balances 82,500 52,000

1,000,000 660,000 1,000,000 660,000

X Ltd takes over Y Ltd on 10 April 1998. The purchase consideration is discharged as
follows:
(i) Issued 35,000 equity shares of Rs.10 each at par to the equity shareholders
of Y Ltd.
(ii) Issued 13% preference shares of Rs.10 each at par to the equity
shareholders of Y Ltd of Y Ltd at 10% premium.
(iii) The debenturehoders of Y Ltd will be converted into equivalent number of
debentures of X Ltd.
Show the opening entries and opening balance sheet of X Ltd after amalgamation.

Q2. The summarised Balance Sheet of Sun Ltd and Moon Ltd as at are as follows:
Balance Sheet as on 31st December, 2007
Sun Ltd Moon Sun Moon
Liabilities Rs. Ltd. Rs. Assets Ltd Rs. Ltd. Rs.
Share Capital of Rs 10 each fully Fixed Assets:
paid up 3,00,000 2,50,000 Plant and Machinery 3,50,0000 4,00,000
11% Preference Share of Rs.10
each - 1,50,000 Current Assets:
General reserve 1,20,000 - Stock 1,00,000 30,000
Profit and Loss A/C 1,00,000 - Debtors 1,25,000 70,000
12% Debentures 50,000 1,00,000 Bank balances 25,000 50,000
Creditors 30,000 50,000

6,00,000 5,50,000 6,00,000 5,50,000

The above two companies agree to amalgamate and form a new company Sunmoon
Ltd on the following conditions:
Sun Ltd.
(iv) For every 5 equity shares, 6 shares of Sunmon Ltd of Rs.10 each will be
issued at par.
(v) Debenture holders will be issued 12% debenture of Sunmoon Ltd of same
amount and denomination.
Moon Ltd.
(i) The holders of 11% preference shares will be allotted 4, 13% preference
shares of Rs.10 each of Sunmoon Ltd for every 5 preference shares held.
(ii) For every 5 equity shares, 6 shares of Sunmoon Ltd of Rs.10 each will be
issued at par.
(iii) Debenture holders will be issued 12% debentures of Sunmoon Ltd of same
amount and denomination.

You are required to show :

(1) the calculation of purchase consideration ; (2) journal entries in the books of
Sunmoon Ltd ; and (3) Opening Balance Sheet of Sunmoon Ltd.

Q3. The summarized Balance sheets of A Ltd and B Ltd as at 1.1.2002 are as
under :

Liabilities A. Ltd B. Ltd Assets A. Ltd B. Ltd

Equity shares 1,50,00 1,00,00 Plant and 2,30,00 1,10,000
of Rs,10 each 0 0 Machinery 0
10% 50,000 - Stock 80,000 90,000
Debentures
12% - 1,00,00 Debtors 30,000 20,000
Debentures 0
Profit and 30,000 60,000 Cash and 60,000 80,000
Loss Account Bank
Reserve 70,000 -
Creditors 1,00,00 40,000
0

4,00,00 3,00,00 4,00,00 3,00,000

0 0 0

The above two companies agree to amalgamate and form a new company AB
Ltd on the following conditions :
(i) An exchange of 6 shares in AB Ltd. of Rs.10 each at par for every 5
shares.
(ii) 90% of equity shareholders will be discharged by the issue of equity
shares of AB Ltd. The balance 10% will be discharged by paying cash
(All assets and liabilities are taken over at book value ).
You are required to show :
(i) The calculation of purchase consideration;
 (ii) Ledger accounts to close the books;
(iii) Journal entries in the books of AB Ltd; and
(iv) Opening Balance Sheet of AB Ltd.

The Balance sheet as on 31st March,2003 of X Ltd and Y Ltd are as under:
Small Small
Liabilities Big Ltd. Ltd Assets Big Ltd. Ltd
Share Capital of Rs 10 each Fixed Assets:
fully paid up 1000000.00 400000.00 Gudwill 80000.00 15000.00
Security Premium 100000.00 - Machineries 910000.00 285000.00
Exports Projects Reserves 17000.00 8000.00 furnitures 92500.00 60000.00
Investment Fluctuation
Reserve 8000.00 3000.00 Investments 75000.00 24000.00
General Reserve 250000.00 100000.00 Current Assets:
Profit and Loss Accounts 48800.00 23500.00 Stock 261000.00 101800.00
Sundry Creditors 83650.00 32840.00 Debtors 93630.00 62310.00
Staff Provident Fund 15000.00 6000.00 Bank balances 53320.00 32230.00
Discount on Issue
Provision for Taxation 43000.00 13000.00 of shares 6000.00

1565450.00 586340.00 1565450.00 586340.00

Small Ltd merged into Big Ltd as on the abovementioned date. Big
Ltd allotted at par 44000 fully paid up equity shares of Rs.10 each to
be distributed among the shareholders of Small Ltd. Expenses which
amounted Rs.7,000 were born by Big Ltd. You are required to
Prepare necessary accounts in the books both companies.

Solution :
In the Books of Small Ltd
Realisation Accounts
Particulars Amount Particulars Amounts
Gudwill 15000.00 Staff Provident Fund 6000.00
Machineries 285000.00 Provision for Taxation 13000.00
furnitures 60000.00 Sundry Creditors 32840.00
Investments 24000.00
Current Assets: Puchase Consideration 440000
Stock 101800.00
Debtors 62310.00
Loss t/f to Equity share
Bank balances 32230.00 a/c 88500
580340.00 580340.00
 Equity Share Capital Account

Particulars Amount Particulars Amounts

Discount on Issue of
shares 6000 Balance b/d 400000
Realisation
accounts(loss) 88500 Exports Projects Reserves 8000.00
Investment Fluctuation
Reserve 3000.00
Equity shares in Big Ltd 440000 General Reserve 100000.00
Profit and Loss Accounts 23500.00

534500 534500

In the Books of Big Ltd.

Balance Sheet
Liabilities Big Ltd. Assets Big Ltd.
Share Capital of Rs 10 each fully paid
up Gudwill 95000.00
1440000 Machineries 1195000.00
Security Premium 100000 furnitures 152500.00
Exports Projects Reserves 25000 Investments 99000.00
Current
Investment Fluctuation Reserve 11000 Assets: 0.00
General Reserve 320500 Stock 362800.00
Profit and Loss Accounts 48800 Debtors 155940.00
Sundry Creditors 116490.00 Bank balances 78550.00
Staff Provident Fund 21000.00
Provision for Taxation 56000.00

2138790 2138790.00