give journal entries necessary with respect to reduction of share capital and show h 621919
Model: Preparation of reconstruction A/c and treatment of surplus in it Veer Ltd. passed the necessary resolution and received sanction of the Court for the reduction of its share capital by Rs.10,00,000 for the purposes numerated in the following:
- To write off the debit balance of P&L A/c Rs.4,20,000
- To reduce the value of plant & machinery by Rs.1,80,000 and of goodwill by Rs.80,000
- To reduce the value of investments to market value by writing off Rs.1,60,000
The reduction was made by converting 1,00,000 preference shares of Rs.20 each fully paid to the same number of preferences shares of Rs.15 each fully paid and by converting 1,00,00 ordinary shares of Rs.20 each Rs.15 paid up into 1,00,000 ordinary shares of Rs.10 each fully paid.
Give journal entries necessary with respect to reduction of share capital and show how would you deal with the balance of the reduction of share capital account?