Q#$1.$ Shan & CO after a series of heavy losses resolve to go to voluntary

liquidation and to reconstruct by means of new company name and style of

Shan CO$.$ Ltd$.$ On the date of reconstruction the balance sheet of Shan& CO

Ltd$.$ Stood as follows.

Balance Sheet

The following are the terms of reconstruction.

The new company take over the assets of the old company not

liabilities.

The capital of the new company is to consist of $500,000$ of Rs$.10$ each

The new company was to purchase the assets of the old company for

the sum of Rs$\mathrm{.}800,000$ payable at Rs$\mathrm{.}700,000$ by the issue of share Rs$.$

$10$ each and $100,000$ payable in cash.

Remaining $30,000$ shares were taken up and paid for in full by the

directors.

The expenses of reconstruction amounted to Rs$\mathrm{.}45,000$ and the

registration expense of the new company to Rs$\mathrm{.}3,000.$

Give Journal entries, realization account and shareholders account in the

books of the old company and balance sheet of the new company.Q#$1.$ Shan & CO after a series of heavy losses resolve to go to voluntary

liquidation and to reconstruct by means of new company name and style of

Shan CO$.$ Ltd$.$ On the date of reconstruction the balance sheet of Shan& CO

Ltd$.$ Stood as follows.

Balance Sheet

The following are the terms of reconstruction.

The new company take over the assets of the old company not

liabilities.

The capital of the new company is to consist of $500,000$ of Rs$.10$ each

The new company was to purchase the assets of the old company for

the sum of Rs$.800,000$ payable at Rs$.700,000$ by the issue of share Rs$.$

$10$ each and $100,000$ payable in cash.

Remaining $30,000$ shares were taken up and paid for in full by the

directors.

The expenses of reconstruction amounted to Rs$\mathrm{.}45,000$ and the

registration expense of the new company to Rs$\mathrm{.}3,000.$

Give Journal entries, realization account and shareholders account in the

books of the old company and balance sheet of the new company.