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model absorption mdash by way of merger the following were the balance sheets of x l 620691

Model: Absorption—by way of merger The following were the balance sheets of X Ltd. and Y Ltd. as on 31 March 2011:

Liabilities

X Ltd. :

Y Ltd. :

Assets

X Ltd.Rs.

Y Ltd.Rs.

2,25,000 10% Preference

22,500

Goodwill

750

Shares of Rs. 100 Each

Freehold Premises

36,000

90,00,000 Equity Shares of

90,000

Machinery

1,03,530

Rs.10 Each

Furniture & Fittings

3,360

2,250

15,00,000 Equity Shares of

15,000

Trademarks

300

Z 10 Each

Stock

38,400

15,030

Capital Reserve

28,800

Debtors

13,020

3,510

General Reserve

37,200

4,350

Bills Receivable

300

Profit & Loss A/c

3,450

660

Bank

6,690

660

10% Debentures

15,000

Creditors

4,350

2,490

2,01,300

22,500

2,01,300

22,500

On the above-mentioned date, X Ltd. merged with Y Ltd. The absorption by way of merger took place on the following conditions:

(i) Y Ltd. allotted to X Ltd. 2,25,000 15% fully paid preference shares of Rs.100 each and 84,00,000 equity shares of Rs.10 each to satisfy the claims of X Ltd’s preference shareholders and equity shareholders respectively. Y Ltd. also agreed to convert 10% debentures of X Ltd. into 12% debentures at a discount of 10%.

(ii) Expenses of liquidation of X Ltd.—Rs. 45,000—were borne by Y Ltd. You are required to:

  1. Prepare necessary ledger accounts with respect to X Ltd.
  2. Pass journal entries in the books of Y Ltd.
  3. Prepare a post-absorption balance sheet in the books of Y Ltd.

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