Question

1. The Balance Sheet of Ms. Raman Ltd as on 31.12.2019
AMOUNT ASSETS AMOUNT
LIABILITIES
Equity share
capital
8,00.000
14,00.000
Land and
building
14,00.000
7,00.000
8% debentures
Inventory
70,000
40,000
Accrued interest
on debentures
Debtors
10,000
1,05.000
Cash in bank
450,000
2000
Income tax
liability
Cash in
hand
15,000
Sundry creditors
Investment
16,60,000
16,60,000
The fixed assets are heavily overvalued. A scheme of reorganization was prepared and
passed. The salient points of the scheme are the following:
1. Each share shall be sub divided into ten fully paid equity shares of Rs. 10 each
2 After such sub division, each shareholder shall surrender to the company 90% of
his holding for the purpose of reissue to debenture holders and creditors so far
as required and otherwise for cancellation
3. Of those surrendered 50,000 Equity shares of Rs. 10 each shall be converted into
8%
4. Preference Share f 50,000 preference shares Rs. 10 each fully paid
The claim of s of Rs. 10 each fully paid for debenture holders
5. The debenture holder's total claim shall be reduced to Rs. 5,00,000. This will be
satisfied by the issue o
6 sundry creditors shall be reduced by 80% and the balance shall be satisfied by
allorting them Equity Shares of Rs 10 each, fully paid from the shares
surrendered.
7. Shares surrendered and not reissued shall be cancelled
Assuming that the scheme is duly approved by all parties interested and the court, draft
necessary journal entries and Balance Sheet of the company after the scheme has been
carried into effect​

Answer 1

Step-by-step explanation:

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