Internal Reconstruction :
Balance sheet shows :
Sundry Creditors : 4,50,000
Adjustment :
a) The claim of Sundry creditors shall be reduced to 80 %
Solution :
Sundry Creditors Dr. 3,60,000 or 90,000
To Capital Reduction 3,60,000 or 90,000
What should be there ? 3,60,000 or 90,000.
It should be Rs. 90,000 .As the creditors claim shall be reduced to 80%. That means creditors should be shown in reconstructed balance sheet at 3,60,000(4,50,000*80%).
creditors should be shown in balance sheet at 360000. bcoz creditors has credit bal. if such creditors r reduced den reduced valve of creditors r debited and present value is shown in balance sheet. entry ll b
old creditors a/c-dr 450000
to cap. reductiona/c 90000
to creditors a/c 3600000
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