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Hak Milik Sant Sahabat dan Kawan-Kawan. Dibenar untuk tujuan pembelajaran sahaja
Given below are the balance sheets of Joo Bhd and Jii Bhd as at 31 December 2009.
Joo Jii
RM RM
Land and building 250,000 150,000
Plant and machinery 100,000 80,000
Goodwill 50,000 20,000
Current assets
Inventories 50,000 50,000
Trade receivables 80,000 40,000
Bank 40,000 50,000
570,000 390,000
Ordinary shares of RM1/- each 400,000 200,000
Share premium 50,000 10,000
Profit and loss balance 100,000 50,000
10% debentures 100,000
Trade payables 20,000 30,000570,000 390,000
Additional information:
It was agreed that:
1. Joo will acquire all the assets (except cash at bank) and liabilities of Jii as at 31 December 2009.
2. The purchase consideration to consist of:
i. 300,000 ordinary shares of RM1/- each in Joo valued at per share, andii. RM12O,000 8% debentures in Joo to discharge the I0% debentures of Jii at a premium
of 20%.
3. The fair value of the assets of Jii was:
RM
Land and building 350,000
Plant and machinery 50,000
Inventories 50,000
Trade receivables 40,000
4. Joo has agreed to pay the liquidation expenses of Jii which amount to RM12,000.
You are required to:
a. Close the books of Joo by means of ledger entries;
b. Record the above transactions in the books of Joo; and
c. Prepare the balance sheet of Joo immediately after the absorption of Joo.
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Hak Milik Sant Sahabat dan Kawan-Kawan. Dibenar untuk tujuan pembelajaran sahaja
Purchase consideration RM
For the benefit of ordinary shareholders 300,000 ordinary shares
of RM1/- each issued at RM1.25 per share (300,000 x RM1.25)
375,000
For the benefit of debenture holders 8% debentures 120,000
Liquidation expenses paid by Joo for Jii cash 12,000
507,000
Calculation of goodwill
RM
Tangible assets taken over Land and building 350,000
Plant and machinery 50,000
Inventories 50,000
Trade receivables 40,000
490,000
Liabilities taken over Trade payables (30,000)
Net tangible assets taken over 460,000
Purchase price 507,000
Goodwill 47,000
a. Ledger entries to close the books of Jii
Realisation account
RM RM
Goodwill 20,000 Joo 495,000
Land and building 150,000 Trade payable 30,000
Plant and machinery 80,000
Inventories 50,000
Trade receivables 40,000
Debenture holders account 20,000Sundry members account 165,000
525,000 525,000
Purchasers account
RM RM
Realisation account 495,000 8% debentures in Joo 120,000
Ordinary shares in Joo 375,000
495,000 495,000
Debenture holders account
RM RM
8% debentures in Zee 120,000 10% debentures 120,000
Realisation account 375,000
120,000 495,000
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Hak Milik Sant Sahabat dan Kawan-Kawan. Dibenar untuk tujuan pembelajaran sahaja
Sundry members account
RM RM
Bank 50,000 Ordinary share capital 200,000
Ordinary shares in Zee 375,000 Profit and loss account 50,000
Share premium 10,000
Realisation account 165,000
425,000 425,000
b. Journal entries to record the absorption of Joo
Debit Credit
RM RM
a. Business purchase account 507,000
Liquidator of Jii 495,000
Bank 12,000
(Being the agreed purchase price)
b. To record the assets acquired at fair valueAssets received
Land and building 350,000
Plant and machinery 50,000
Inventories 50,000
Trade receivables 40,000
Goodwill 47,000
Trade payables 30,000
Business purchase account 507,000
(Being assets and liabilities acquired)
c. Joo 495,000
8% debentures 120,000Ordinary share capital 300,000
Share premium 76,000
(Being issue of shares in settlement of purchase price)
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Hak Milik Sant Sahabat dan Kawan-Kawan. Dibenar untuk tujuan pembelajaran sahaja
Joo
Balance sheet as at 31 December 2009
RM RM
Land and building 600,000
Plant and machinery 150,000
Goodwill (50,000 + 47,000) 97,000
847,000
Current assets
Inventories 100,000
Trade receivables 120,000
Bank 28,000 248,000
1,095,000
Issued and paid up capital:
700,000 ordinary shares 700,000
Share premium 125,000
Profit and loss account 100,000
925,000
Non-current liabilities
8% debentures 120,000
Current liabilities
Trade payables 50,000
1,095,000