Query for internal reconstruction

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keval (Querist)
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05 August 2015 Plz tell me the journal entries of following adjustments in the internal reconstruction 1. A member holding 100 equity shares of Rs 2 each opposed the scheme and his shares were taken over by a director on payment of Rs 1,000 as fixed by the court. 2.creditor =3,00,000, surrendered shares =2,70,000 Sundry creditors agree to reduce their claim by 20%in consideration of their getting shares of Rs 35,000 out of the surrendered equity shares.

Amol S Joglekar

Amol S Joglekar (Expert)
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05 August 2015 01. Is the amount of Rs.1000 fixed by the court?... Per se there is no any entry in the books of Company, unless however the court has ordered the Company so to do.

02. Transfer the assets and Liabilities to RECONSTRUCTION account. Realise the assets and liabilities at the agreed value. The net effect shall be the reconstruction reserve/goodwill, as the case may be.

Like in this case, Debit creditors account for 60,000 and credit Reconstruction account with the same amount.

Debit Capital Account with 235,000 and credit Reconstruction account with the same amount.

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