the company paid the balance due to the vendors on 1 march 2011 ignore the question 618275

M/s Anju & Manju carrying on business in partnership decided to dissolve the firm and sell off the business to a limited company, a newly floated one, on 31 December 2010, when the firm’s position was as follows:

The arrangement with the limited company was as follows:

1. Furniture and stock were purchased at balance sheet values less 10%.
2. Goodwill of the firm was valued at Rs.1,21,440.
3. The firm’s debtors, cash and creditors were not to be taken over by the company, but the company agreed to collect the book debts and discharge the liabilities of the vendor as agent, for which service the company was to be paid 3% on all collections from the vendor’s debtors and 2% cash paid to vendor’s creditors.
4. The purchase price was to be paid to the company in fully paid ordinary shares of Rs.50 each at a premium of Rs.10 per share

The company received Rs.5,76,000 from vendor’s debtors in full satisfaction during the first 2 months after purchase of business. The creditors were paid off, Rs.3,000 being allowed by them as discount. The company paid the balance due to the vendors on 1 March 2011. (Ignore the question of in term distribution of cash.)

Write up journal entries and balance sheet in the company’s books.