A company was formed with an authorized capital of Rs.10,00,000 divided into 50,000 equity shares of Rs.10 each and 50,000 preference shares of Rs.100 each to acquire the going concern of Mohan whose balance sheet stood as follows: Liabilities Assets Bills Payable 7,000 Cash at Bank 9,000 Sundry Creditors 12,800 Book Debts 15,000 Capital 2,64,200 Insurance Policy 8,000 Stock in Trade 62,000 Plant & Machinery 1,00,000 Freehold Premises 90,000 2,84,000 2,84,000 The purchase price was agreed upon at Rs.3,50,000 to be paid; Rs.1,00,000 in fully paid equity shares, Rs.1,00,000 in fully paid preference shares, Rs.60,000 in redeemable debentures and the balance in cash. The company did not take over the insurance policy, valued the stock and plant and machinery at 10% less than the book value and the freehold premises at 20% move than the book value. The liabilities will be discharged by the company. The balance of both kinds of shares was issued to and paid up by the public with the exception of 1,200 equity shares held by Sommath on which he did not pay the last call of Rs.3 per share and which were subsequently forfeited and reissued at a discount of 20%. Give journal entries to record the above and prepare the balance sheet of the company.
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