Given below is the Balance Sheet of ABC Ltd. as at March 31, 2026: Particulars Notes ₹ Equity and Liabilities: 1 Shareholders' fund A Share Capital…

Given below is the Balance Sheet of ABC Ltd. as at March 31, 2026: Particulars Notes ₹ Equity and Liabilities: 1 Shareholders' fund A Share Capital 1 18,50,000 B Reserve and Surplus 2 (6,53,000) 2 Non-Current Liabilities A Long-term borrowings 3 6,78,000 3 Current Liabilities A Trade Payables 3,57,000 B Other Current Liabilities 4 85,000 Total 23,17,000 Assets: 1 Non-current Assets A Property, plant and equipment 5 9,78,000 B Intangible assets 6 4,50,000 2 Current Assets A Inventories 5,39,000 B Trade Receivables 3,50,000 Total 23,17,000 Notes to Accounts: Particulars ₹ 1 Share Capital Equity Share Capital 21,000 Equity Shares of 50 each 10,50,000 Preference Share Capital 16,000, 8% Cumulative Preference Shares of 50 each 8,00,000 (Preference dividend is in arrears for 3 years) Total 18,50,000 2 Reserve and Surplus Debit balance of Profit and Loss Account (6,53,000) 3 Long-term borrowings 6% Debentures 6,78,000 4 Other current liabilities Interest payable on debentures 40,680 Outstanding wages & salaries 44,320 Total 85,000 5 Property, plant and equipment Building at cost less depreciation 5,00,000 Plant and machinery at cost less depreciation 4,78,000 Total 9,78,000 6 Intangible Assets Goodwill 1,25,000 Trademarks 3,25,000 Total 4,50,000 Since the company was not earning profits, it was decided to reconstruct the company for which necessary resolution was passed and sanctions were obtained from appropriate authorities. A summary of the reconstruction scheme is as follows: (i) The equity shareholders have agreed that their 50 shares should be reduced to 10 by cancellation of 40 per share. They have also agreed to subscribe for three new equity shares of 10 each for each equity share held. (ii) The preference shareholders have agreed to waive off the arrear of dividends. They also agreed to accept for each 50 share, 4 new 5% preference shares of 10 each fully paid up, plus one new equity share of 10 each fully paid up. (iii) The debenture holders accepted the inventories at an agreed figure of 5,20,000 and - 1,48,680 in cash and forego the remaining amount due to them. (iv) Building is to be revalued at 6,50,000. (v) A contingent liability for which no provision had been made was settled at 10,800 and of this amount, 4,800 was recovered from insurance. (vi) The debit balance of Profit and Loss account is to be written off. (vii) Any balance remaining is first used to write down the value of goodwill and then applied to trademarks. You are required to pass necessary journal entries to record the above reconstruction in the books of ABC Limited.