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model journal entries in the books of transferee company mdash amalgamation in the n 620685

Model: Journal entries in the books of transferee company—amalgamation in the nature of merger On 31 March 2011, the balance sheet of AX Ltd stood as follows:

Liabilities

Assets

Share Capital:

Plant & Machinery

8,05,000

75,000 Equity Shares of Rs.10 Fully Paid

7,50,000

Furniture & Fixtures

97,200

Securities Premium

75,000

Stock

3,52,750

General Reserve

3,12,750

Debtors

99,220

Profit & Loss A/c

92,650

Cash at Bank

56,600

Creditors

1,80,370

14,10,770

14,10,770

On this date AX Ltd. took over the business of BY Ltd. for Rs.3,30,000 payable in the form of its fully paid equity shares of Rs.10 each at par. Shareholders of BY Ltd. get 110 shares of AX Ltd. for every 100 shares held in BY Ltd. The scheme of amalgamation also provided that 1,500 12% debentures of BY Ltd. would be converted into equal number of 14% debentures of AX Ltd. of Rs.100 each. The balance sheet of BY Ltd. on the date of amalgamation was as follows:

Liabilities

Rs.

Assets

Rs.

Share Capital:

Machinery

2,75,000

30,000 Equity Shares of Rs.10 Each Fully

3,00,000

Furniture

67,600

Paid

Stock

1,57,900

Capital Reserve

6,500

Debtors

64,650

Foreign Projects Reserve

4,850

Cash at Bank

37,180

General Reserve

37,675

Profit & Loss A/c

12,065

1,50012% Debentures of Rs. 100 Each

1,50,000

Creditors

91,240

6,02,330

6,02,330

You are required to pass journal entries in the books of AX Ltd. assuming that the amalgamation is in the nature of merger.

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