the remaining equity shares were issued at a premium of 10 and the cash was duly rec 618242

Sowmya Ltd. was formed on 1 April 2010, with an authorized capital of Rs.35,00,000 divided into 25,000 equity shares of Rs.100 each and 10,000 preference shares of Rs.100 each, to acquire the business of Bhama as a going concern. The balance sheet of Bhama as at 31 March 2011 was as follows:

The purchase consideration was to be discharged by Sowmya Ltd. by issue of 7,500 equity shares of Rs.100 each, 2500 preference shares of Rs.100 each and Rs.1,00,000 in cash. Sowmya Ltd. also agreed to discharge the sundry creditors but declined to accept X’s loan. All the assets of the old company were taken over at their balance sheet values except stock which was valued at Rs.2,00,000. A provision of 5% was also created against sundry debtors.

To provide necessary working capital and to pay to purchase consideration, the remaining equity shares were issued at a premium of 10% and the cash was duly received. The preliminary expenses amounting to Rs.75,000 were paid by the Company immediately after the issue. Show the opening entries in the books of Sowmya Ltd. and also the opening balance sheet.