The Summarized Balance Sheets of Gyan Ltd. And Kiran Ltd. as on 31st March 2024 are given below: Gyan Ltd. (₹ in lakhs) Kiran Ltd. (₹ in lakhs)…

Journal Entries in the books of Gyan Ltd. Date Particulars (in lakhs) Dr. Cr. 2024 31 March Loan from bank A/c (40 x 50%) Dr. 20 To Reconstruction A/c 20 (Being loan from bank waived off to the extent of 50%) Equity share capital A/c (10) Dr. 650 To Equity share capital A/c (2) (650 x 2) 130 To Reconstruction A/c (650–130) 520 (Being Equity share of 10each reduced to 2 each) Equity share capital A/c (2) Dr. 130 To Equity share capital A/c (10each) 130 (Being 5 Equity shares of 2each consolidated to one share of 10each) Reconstruction A/c (20 + 520) Dr. 540 To Profit and loss A/c (loss) 260 To Capital reserve A/c 280 (Being debit balance of P/L A/c set off against reconstruction account and balance transferred to capital reserve account) Business purchase A/c Dr. 1010 To Liquidator of Kiran Ltd. 1010 (Being purchase of business of Kiran Ltd.) PPE A/c Dr. 900 Investment A/c Dr. 250 Trade receivables A/c Dr. 135 Cash at bank A/c Dr. 140 To Trade payables A/c 105 To Dividend payable A/c 60 To 12% Debenture A/c 100 To Business purchase A/c 1010 To General Reserves A/c 150 (Being assets, liabilities and reserves taken over under pooling of interest method) Liquidator of Kiran Ltd. A/c Dr. 1010 To Equity share capital A/c 400 To 10% Preference share capital 200 To Securities Premium [(40 x 10) + (2 x 5)] 410 (Being payment made to liquidators of Kiran Ltd. by allotment of 40 lakh @10 new equity shares and 2 lakh preference shares @105) Trade payables A/c Dr. 50 To Trade receivables A/c 50 (Being mutual owing cancelled) Dividend Payable A/c Dr. 60 To Bank A/c 60 (Being dividend paid off) Balance Sheet of Gyan Ltd. (and reduced) after merger as on 31.3.2024 Particulars Note No. (₹ in lakhs) I. Equity and Liabilities (1) Shareholder's Funds (a) Share Capital 1 880 (b) Reserves and Surplus 2 840 (2) Non-Current Liabilities Long-term borrowings 3 195 (3) Current Liabilities (a) Trade Payables 4 150 (b) Borrowings 5 15 Total 2,080 II. Assets (1) Non-current assets (a) Property, plant and equipment 6 1,600 (b) Investment 7 250 (2) Current assets (a) Trade receivables 8 150 (b) Cash and cash equivalents 9 80 Total 2,080 Notes to Accounts (₹ in lakhs) (₹ in lakhs) 1. Share Capital 50 lakhs (13 lakh + 40 lakh) Equity shares of 10 each fully paid 530 (Out of the above, 40 lakh shares have been issued for consideration other than cash) 3.5 lakhs (1.5 + 2) 10% Preference share of 100each fully paid (Out of which 2 lakhs shares have been issued for consideration other than cash) 350 880 2. Reserves and Surplus Capital reserve 280 Securities Premium 410 General reserve 150 840 3. Non-current Borrowings 12% Debentures (75 + 100) 175 Loan from bank (40 - 20) 20 195 4. Trade Payables (95+105-50) 150 5. Current Borrowings Bank overdraft 15 6. Property, plant and equipment (700 + 900) 1,600 7. Investment 250 8. Trade Receivables (65 + 135 – 50) 150 9. Cash and cash equivalents Cash at Bank (140 - 60) 80 Working Note: Calculation of purchase consideration Shares 2 shares of Gyan Ltd. will be issued in exchange of every 3 shares of Kiran Ltd. (i.e. 40,00,000 equity shares of Gyan Ltd will be issued against 60,00,000 equity shares of Kiran Ltd.) (60 lakhs x 2/3) 40,00,000 ₹ in lakhs Payment to equity shareholders (40 lakhs x 20) 800 Payment to preference shareholders (2 lakhs x 105) 210 Total Purchase consideration 1,010