i have a doubt from chap internal reconstruction
ques is : balance sheet : on liab side ,debenturs are given 14,00,000
accrued interest on above 70,000
1) debentures holders total claim to be reduced to rs 2,30,000 . this will be satisfied by the isssue to them 46000 , 10
% cumulative preference shares of rs . 5 each fully paid up.
(prefernce share is not given in balance sheet)
i am not getting this entry ..
regards :
shalu gupta
bal in deb a/c is 1400000
accroud interest is 70000
.'.total claim 1470000
claim reduce to 230000 (deb holder a/c)
reduce by 1240000 (goto capital reduction a/c)
JOURNAL ENTRY
1) debenture a/c dr 1400000
intrest on debenture a/c dr 70000
To capital reduction a/c 1240000
To debenture holder a/c 230000
2) debenture holder a/c dr 230000
To 10%pref share capital a/c 230000
[
effect in balance sheet:
1.debenture a/c will not appiare in bal sheet
2. intrest on debenture a/c is also not appiare in bal sheet
3.10%pref share will we shown with amounting rs 230000 as fully paid up
4.At the end bal of capital reduction transfer to capital reserve a/c
]
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