Financial Reporting and Ethics - The Institute of Chartered ...

FINANCIAL REPORTING AND ETHICS(iii) Yellow Ltd to take over all the assets and liabilities (including the bankoverdraft) at their book values.(iv) Cost of liquidation to be paid by Yellow Ltd 1,000.The balance of the authorized share capital of Yellow Limited was issued bypublic offer through prospectus. The offer which was payable in full onapplication was fully subscribed and allotted.You ou are e requirequired ed to:(a) Show the necessary ledger accounts to close the book of each company(b) The journal entries to open the book of Yellow Ltd(c) Prepare the balance sheet of Yellow Ltd after amalgamation.SUGGESTED SOLUTION 3.4RealisationAccountRoseBlacky RoseBlackyN N N NGoodwill 10,000 10,000 Yellow Ltd (pc) 181,785 50,800Freehold property 45,000 13,000 Sundry membersPlants & Machinery 35,000 11,000 (Loss on 51,015 11,900Stock 68,276 15,200 realisation)Sundry debtors 25,850 9,5005% Debenture 15,000 3,000Creditors forDissolution expenses 2,500 1,000Bank 31,174 ________ _________________232,800 62,700 232,800 62,700Sundry Members Account (Ordinary)Rose Blacky RoseBlackyLtd Ltd LtdLtdProfit & Loss Ordinary shareAccount 13,600 capital 150,000 39,000Ord share in Forfeited shareYellow 125,000 13,000 capital 150 __Bank 1,000 500 Reserves 10,000 __Realisation Loss 51,015 11,900 Profit & loss 16,865________177,015 39,000 177,015 39,00034