you are required to show the vendor rsquo s accounts in the company rsquo s ledger a 618279

M and N are proprietors of a competing business. In order to protect their business, they float a company called M&N Ltd. with an authorized capital of Rs.30,00,000 divided into 1,80,000 equity shares of Rs.10 each and 12,000 12% preference shares of Rs.100 each.

On the date of the transfer, M’s assets amount to Rs.7,96,050 excluding goodwill. His liabilities at the same time amount to Rs.97,800. On the same date, N’s assets amount to Rs.5,85,000 excluding goodwill and his liabilities to Rs.45,000. It is agreed that the company will take over the assets and liabilities of both M and N and will issue to each 45,000 equity shares fully paid up and pay the balance in cash. It is also agreed that fully paid up preference shares will be issued to them on account of goodwill which is to be valued on the basis of two years’ purchases of the last three year’s profits which are as follows:

In addition to the above, the public subscribe and pay in full for 60,000 equity shares and the remaining preference shares. The company also pays 45,000 as preliminary expenses. You are required to show the vendor’s accounts in the company’s ledger and prepare the balance sheet of the company after these transactions are completed.