Q. 24. The following is the balance sheet of Recourse Ltd. having an authorised capital of Rs. 2,000 Cr. as on 31st March, 2010 (Rs. in crores Rs. Rs. Sources of funds: Shareholders' funds Share capital Equity shares of Rs. 20 each fully paid in cash 500 Reserves and surplus (Revenue) 1.500 2.000 Loan funds Secured against : (a) Fixed assets Rs. 600 Cr. (b) Working capital Rs. 200 Cr. . . 800 Unsecured 1 200 2.000 4,000 Employment of funds Fixed assets Gross block 1,600 Less. Depreciation 400 1.200 Investment at cost (Market value Rs. 2,000 Cr.) 800 Net Current assets Current assets 6,000 Less: Current liabilities (4,000) 2,000 4,000 Capital commitments : Rs. 1,400 crores. The company consists of 2 divisions. 1. Established division whose gross block was Rs. 400 crores and net block was Rs. 60 crores, Current assets were Rs. 3,000 crores and working capital was Rs. 2,400 crores; the entire amount being financed by shareholders' funds. . New project division to which the remaining Fixed assets, Current assets and Current liabilities related The following scheme of reconstruction was agreed upon a Two new companies Sun Ltd. and Moon Ltd. are to be formed. The authorised capital of Sun Ltd. is to be Rs. 2,000 crores. The authorised capital of Moon Ltd. is to be Rs. 1,000 crores. b. Moon Ltd. is to take over investments at Rs. 1,600 crores and unsecured loans at balance sheet value It is to allot equity share of Rs. 20 cach at par to the members of Diverse Ltd. in satisfaction of the amount due under the arrangement. Sun Ltd. is to take over the Fixed assets and networking capital of the new project division along with the secured loans and obligation for capital commitments for which Recourse Ltd. is to continue to stand guarantee at book values. It is to allot one crore equity shares of Rs. 20 each as consideration to Recourse Ltd. Sun Ltd. made an issue of unsecured convertible debentures of Rs. 1,000 crores carrying interest at 15% per annum and having a right to convert into equity shares of Rs. 10 each at par on 31.3.2010. This issue was made to the members of Sun Ltd, as a right who grabbed the opportunity and subscribed in full. d. Kecourse Ltd. is to guarantee all liabilities transferred to the companies. e. Recourse Ltd. is to make a bonus issued of equity shares in the ratio of one equity share for every equity share held by making use of the Revenue reserves. Assume that the above scheme was duly approved by the Honourable High Court and that there are no other transactions. Ignore taxation. . You are asked to : 1. Pass journal entries in the books of Recourse Ltd., and ii. Prepare the balance sheets of the three companies giving all the information required by the Companies Act, 1956 in the manner so required to the extent of available information