X CO. Ltd. agrees to acquire, as a going concern, the business of Y Co. Ltd. on the basis of vendor's Balance Sheet at 31 March, 2016 which is as follows: 1. Equity and Liabilities (1) Shareholders' Funds (a) Share Capital : Authorised Capital : 25,000 Shares of $50 each 12,50,000 Issued Capital : 20,000 Shares of $50 each 10,00,000 Called-up Capital : 20,000 Shares of $50 each, $30 called up 6,00,000 (b) Reserves and Surplus: Reserves Fund 1,25,000 Surplus Account 60,000 (2) Current Liabilities Creditors 75,000 Total Equity and Liabilities 8,60,000 II. Assets (1) Non-current Assets Fixed Assets : Freehold Property 2,50,000 Plant and Machinery 50,000 Investment : 6% Govt. Papers 10,000 (2) Current Assets Stock 3,00,000 Debtors ($ 2,30,000 -10,000 Provision) 2,20,000 Cash at Bank 30,000 Total Assets 8,60,000 X Co. Ltd. took over all the assets and liabilities of the vendor company, subject to the retention of $15,000 cash to provide for cost of liquidation, income-tax etc. and to satisfy any dissenting shareholders. The consideration for the sale is the allotment to the shareholders in the vendor company of one share $100 ( $50 paid up) in the X Co. Ltd. for every two shares in the Y Co. Ltd. The market value of the X Co.'s shares, which are $50 paid up, at the date of sale is $ 70 each. The liquidator of the vendor company has paid out of $15,000 retained ; cost of liquidation amounting to $2,500, income-tax $7,500 and dissenting shareholders of 100 shares at $32.50 per share i.e., $ 3,250. The sale and purchase were carried through on terms of the agreement. Prepare necessary Ledger Accounts in the books of Y Co. Ltd. and Journal Entries in the books of X Co. Ltd.
X CO. Ltd. agrees to acquire, as a going concern, the business of Y Co. Ltd. on the basis of vendor's Balance Sheet at 31 March, 2016 which is as follows: 1. Equity and Liabilities (1) Shareholders' Funds (a) Share Capital : Authorised Capital : 25,000 Shares of $50 each 12,50,000 Issued Capital : 20,000 Shares of $50 each 10,00,000 Called-up Capital : 20,000 Shares of $50 each, $30 called up 6,00,000 (b) Reserves and Surplus: Reserves Fund 1,25,000 Surplus Account 60,000 (2) Current Liabilities Creditors 75,000 Total Equity and Liabilities 8,60,000 II. Assets (1) Non-current Assets Fixed Assets : Freehold Property 2,50,000 Plant and Machinery 50,000 Investment : 6% Govt. Papers 10,000 (2) Current Assets Stock 3,00,000 Debtors ($ 2,30,000 -10,000 Provision) 2,20,000 Cash at Bank 30,000 Total Assets 8,60,000 X Co. Ltd. took over all the assets and liabilities of the vendor company, subject to the retention of $15,000 cash to provide for cost of liquidation, income-tax etc. and to satisfy any dissenting shareholders. The consideration for the sale is the allotment to the shareholders in the vendor company of one share $100 ( $50 paid up) in the X Co. Ltd. for every two shares in the Y Co. Ltd. The market value of the X Co.'s shares, which are $50 paid up, at the date of sale is $ 70 each. The liquidator of the vendor company has paid out of $15,000 retained ; cost of liquidation amounting to $2,500, income-tax $7,500 and dissenting shareholders of 100 shares at $32.50 per share i.e., $ 3,250. The sale and purchase were carried through on terms of the agreement. Prepare necessary Ledger Accounts in the books of Y Co. Ltd. and Journal Entries in the books of X Co. Ltd.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:X CO. Ltd. agrees to acquire, as a going concern, the business of Y Co. Ltd. on the basis of vendor's
Balance Sheet at 31* March, 2016 which is as follows:
1. Equity and Liabilities
2$
(1) Shareholders' Funds
(a) Share Capital :
Authorised Capital : 25,000 Shares of $50 each
12,50,000
Issued Capital : 20,000 Shares of $50 each
10,00,000
Called-up Capital : 20,000 Shares of $50 each, $30 called up
6,00,000
(b) Reserves and Surplus:
Reserves Fund
1,25,000
Surplus Account
60,000
(2)
Current Liabilities
Creditors
75,000
Total Equity and Liabilities
8,60,000
II. Assets
(1) Non-current Assets
Fixed Assets :
Freehold Property
2,50,000
Plant and Machinery
50,000
Investment : 6% Govt. Papers
10,000
(2) Current Assets
Stock
3,00,000
Debtors ($ 2,30,000 –10,000 Provision)
2,20,000
Cash at Bank
30,000
Total Assets
8,60,000
X Co. Ltd. took over all the assets and liabilities of the vendor company, subject to the retention
of $15,000 cash to provide for cost of liquidation, income-tax etc. and to satisfy any dissenting
shareholders.
The consideration for the sale is the allotment to the shareholders in the vendor company of one
share $100 ( $50 paid up) in the X Co. Ltd. for every two shares in the Y Co. Ltd.
The market value of the X Co.'s shares, which are $50 paid up, at the date of sale is $ 70 each. The
liquidator of the vendor company has paid out of $15,000 retained ; cost of liquidation amounting to
$2,500, income-tax $7,500 and dissenting shareholders of 100 shares at $32.50 per share i.e., $ 3,250.
The sale and purchase were carried through on terms of the agreement.
Prepare necessary Ledger Accounts in the books of Y Co. Ltd. and Journal Entries in the books of X
Co. Ltd.
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