Success Ltd was formed to acquire the business of R and S who share profits in the ratio of 2:1, respectively. The Balance Sheet of R and S on Dec 30, 2009 was as follows.
|
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the purchase consideration is discharged as follows 20 000 equity shares of rs 10 ea 609152
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|
Rs |
Assets |
Rs |
|
Bills Payable |
34,400 |
Land and Buildings |
80,000 |
|
Sundry Creditors |
43,200 |
Machinery |
40,000 |
|
Mrs. R”s Loan |
6,400 |
Stock |
48,000 |
|
Capitals: |
Debtors |
46,400 |
|
|
R 1,28,000 |
Bills Receivable |
32,800 |
|
|
S 80,000 |
2,08,000 |
Investments |
9,600 |
|
Cash at Bank |
19,200 |
||
|
Goodwill |
16,000 |
||
|
2,92,000 |
2,92,000 |
It was agreed by the company to take over the assets at book value with the exception of Land and Buildings and Stock which are taken over at Rs 80,000 and Rs 50,000, respectively. The investments are retained by the firm and sold by the firm for Rs 8,000. They also discharged the loan of Mrs. R. The company takes over the remaining liabilities. The value of goodwill is fixed at Rs 57,600.
The purchase consideration is discharged as follows: 20,000 equity shares of Rs 10 each and the balance in cash. Close the books of the firm.
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