The following was the Balance Sheet of Tin Toys Ltd. as on 31st March, 2016:

The directors find that the machinery is overvalued by ₹ 10,000. It is now proposed to write-down this asset to its true value and extinguish Goodwill Account, Profit and Loss Account by adopting the following scheme:

(a) Forfeit the shares on which the calls are outstanding;

(b) Reduce the paid-up capital by ₹ 3 per share;

(c) Reissue the forfeited shares at ₹ 5 per share;

(d) Utilise the provision for taxes, if necessary. Draft the Journal Entries necessary for giving effect to the above scheme and prepare the reconstructed Balance Sheet of the company.

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I. EQUITY AND LIABILITIES (1) Shareholders' Funds: (a) Share Capital (b) Reserves and Surplus --Profit and Loss (2) Share Application Money Pending Allotment: (3) Non-current Liabilities: (4) Current Liabilities: (a) Short-term Borrowings (b) Trade Payables -- Sundry Creditors (c) Other Provisions-Provision for Tax TOTAL II. ASSETS (1) Non-current Assets: (a) Fixed Assets Balance Sheet of Tin Toy Ltd. as at 31st March, 2016 (i) Tangible Assets: (2) Current Assets: TOTAL Buildings Machinery (ii) Intangible Assets -- Goodwill Particulars (a) Current Investments (b) Inventories (c) Trade Receivables --- Sundry Debtors (d) Cash and Cash Equivalents -- Cash at Bank Note No. (2) (1) Amount (3) 1,11,000 (22,300) 15,425 4,000 1,08,125 20,500 50,850 10,000 10,275 15,000 1,500 1,08,125