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X Ltd. had - 1,00,000 equity share capital divided into 1,000 shares of 100 each out of which 80 per share was called up and paid up. It has 1,500…

CA Intermediate · Advanced Accounting · MTP · September 2025

X Ltd. had - 1,00,000 equity share capital divided into 1,000 shares of 100 each out of which 80 per share was called up and paid up. It has 1,500 cumulative preference shares of 100 each fully paid up. Intangible assets include Goodwill of 80,000 and patents of 27,800. Preference dividends are in arrears of 33,000. You are required to show the entries (Ignore dates) under each of the following conditions: If X Ltd. resolves to subdivide the equity shares into 10,000 equity shares of 10 each of which 8 per share is called up and paid up.If X Ltd. resolves to convert its 1,000 equity shares of 100 each (assume fully - paid) into 1,00,000 worth of stock.The preference shares are to be converted into 11% unsecured debentures of 100 each (including arrears of dividends).Patents and Goodwill to be written-off.

Suggested Answer and Working Notes:

Journal Entries in the books of X Ltd. Dr. Particulars ₹ (i) Equity Share Capital (100) A/c 80,000 To Equity Share Capital (10) A/c 80,000 (Being the sub-division of 1,000 shares of 100each with 80paid up into 10,000 shares 10each with 8paid up by resolution in general meeting dated....) (ii) Equity Share Capital (100) A/c Dr. 1,00,000 To Equity Stock A/c 1,00,000 (Being conversion of 1,000 fully paid Equity Shares of 100into 1,00,000 Equity Stock as per resolution in general meeting dated...) (iii) Cumulative Preference Share Capital A/c Dr. 1,50,000 Capital Reduction (Reconstruction) A/c Dr. 33,000 To 11% Debentures (Unsecured) 1,83,000 (Being 1,500 cumulative preference shares of 100each fully paid up converted into 11% debentures of 100each (including arrears of dividends amounting - 33,000) (iv) Capital Reduction (Reconstruction) A/c Dr. 1,07,800 To Goodwill 80,000 To Patents 27,800 (Writing off patents, goodwill)

Topics: Accounting for Reconstruction of Companies

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X Ltd. had - 1,00,000 equity share capital divided into 1,000 shares of 100 each out of which 80 per share was called up and paid up. It has 1,500…

Suggested Answer and Working Notes:

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