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Hak Milik Sant Sahabat dan Kawan-Kawan. Dibenar untuk tujuan pembelajaran sahaja

QUESTION 1

The following was the balance sheet of Saja Jaya Ltd on 31st March 2009

Balance Sheet

RM RM

Fixed Assets Authorised CapitalGoodwill and trade marksPlant and machinery (net)

80,00075,600

50,000 7% preference share @RM1 50,000

Furniture and fitting 10,200 700,000 ordinary share @ RM0.50 350,000400,000

Current AssetsStock 61,950 Issued and Fully Paid CapitalSundry debtorsCash in hand

267005050

55,000 7% preference share @RM1 55,000410,000 ordinary share @ RM0.50 205,000Capital reserve 21,000Profit and loss (56,300)

Current LiabilitySundry Creditor 15,600Bank Overdraft 19,200

259,500 259,500

The following scheme of capital reduction was sanctioned by the court and agreed by the

shareholders:

a. Preference share were to be reduced to RM0.50 each.

b. Ordinary share were to be reduce to RM0.10 each.

c. The capital reserve was to be eliminated.

d. The reduce shares of both classes were to be consolidated into new ordinary share of RM1

each.

e. An issue of RM65,000 8% debentures at par was to be made to provide fresh working

capital.

f. The sum written off the issued capital of the company and the capital reserve to be used to

write off the debit balance of the profit and loss account and to reduce fixed asset by the

following amounts:

Goodwill and trademarks RM70,000

Plant and machinery RM25,000

Furniture and fitting RM9,000g. The bank overdraft was to be paid off out of the proceeds of the debentures which were duly

issued and paid in full.

A further resolution was passed to restore the authorized capital of the company to 400,000

ordinary share of RM1 each.

You are required to prepare journal entries to give the effect to the above scheme and draw up

the balance sheet of the company after completion of the scheme.

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Hak Milik Sant Sahabat dan Kawan-Kawan. Dibenar untuk tujuan pembelajaran sahaja

ANSWER

Journal Entries

RM RM

a. Preference share 27,500

Capital conduction account 27,500

b. Ordinary share 164,000Capital conduction account 164,000

c. Capital reserve 21,000

Capital conduction account 21,000

d. Preference share 27,500

Ordinary share 41,000

Ordinary share 68,500

e. Bank 65,000

8% debenture 65,000

f. Capital conduction account

Profit and loss 56,300

Goodwill and trademarks 70,000

Plant and machinery 25,000

Furniture and fitting 9,000

g. Overdraft bank 19,200

Bank 19,200

Capital Conduction Account

RM RMProfit and loss 56,300 Preference share 27,500Goodwill and trademarks 70,000 Ordinary share 164,000Plant and machinery 25,000 Capital reserve 21,000Furniture and fitting 9,000Reserve 52,200

212,500 212,500

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Hak Milik Sant Sahabat dan Kawan-Kawan. Dibenar untuk tujuan pembelajaran sahaja

Balance Sheet

RM RMFixed Assets Authorised CapitalGoodwill and trade marksPlant and machinery (net)

10,00050,600

50,000 7% preference share @RM1 50,000

Furniture and fitting 1,200 700,000 ordinary share @ RM0.50 350,000

400,000Current AssetsStock 61,950 Issued and Fully Paid CapitalSundry debtorsCash in hand

267005050

Ordinary shareReserve

68,50052,200

Bank 45,800Long Term Liability8% debenture 65,000

Current LiabilitySundry Creditor 15,600

201,300 201,300