Oman College of Management and Technology,
Department of Administrative and Financial Sciences:
Advanced Accounting (203304)
Chapter-1
Exercises:
1.
A Company Ltd. and B Company Ltd. were merged into C Company Ltd on 1.1.2013. The
following balance sheets of A Ltd and B Ltd as on 31-12-2012 are given below:
Balance sheets of A Ltd and B Ltd
Capital and
A Ltd
B Ltd
Assets
(Amount in RO)
A Ltd
B Ltd
Liabilities
Share Capital:
Land and Buildings
40,000
35,000
Equity shares of
Plant and Machinery
35,000
20,000
RO10 each
100,000
75,000
General Reserve
40,000
25,000 Furniture and Fittings
15,000
10,000
Profit and Loss A/C
30,000
20,000 Investments
15,000
5,000
Creditors
30,000
30,000 Stock
30,000
25,000
Sundry debtors
35,000
30,000
Bank Balances
30,000
25,000
200,000
150,000
200,000
150,000
C Company Ltd took over all the assets and liabilities for a purchase consideration of RO.
190,000 for A Ltd and RO 130, 000 for B Ltd. The purchase consideration is to be discharged
by the issue of equity shares and debentures in equal ratio.
Required:
Pass journal entries in the books of all the companies and prepare ledger accounts. Also
prepare the opening balance sheet of C Company Ltd.
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2.
Oman Papers Company Ltd is absorbed by Oman Boards Company Ltd on 1.1.2013 on
which date the balance sheet of both the companies appeared as follow:
Balance sheets of A Ltd and B Ltd
(Amount in RO)
Capital and
Oman Paper
Oman
Liabilities
Ltd
Boards Ltd.
Assets
Oman
Oman
Paper Ltd
Board Ltd.
Share Capital:
Land and Buildings
70,000
90,000
Equity shares of
Plant and Machinery
55,000
75,000
RO10 each
120,000
140,000
General Reserve
45,000
30,000 Furniture and Fittings
28,000
34,000
Profit and Loss AC
28,000
45,000 Investments
25,000
54,000
Bank Loan
20,000
50,000 Stock
17,000
24,000
Creditors
12,000
55,000 Sundry debtors
15,000
30,000
Bank Balances
15,000
13,000
225,000
320,000
225,000
320,000
On absorption, Oman Boards Company Ltd agreed for the following:
1. Issue of 10,000 equity shares of RO 10 each;
2. Issue of 7000, 12% debentures of RO. 10 each at a premium of 20%; and
3. A cash payment of RO 19,000
Required:
1. Pass journal entries and prepare Realisation account in the books of Oman Paper Co.
Ltd;
2. Pass journal entries and prepare the Balance sheet of Oman Boards Company Ltd.
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3.
The balance sheet of Dhofar Machinery Company Ltd as on 31-12-2012 is given below:
Capital and Liabilities
Equity shares of RO10 each
Amount (RO)
Assets
Amount (RO)
120,000 Land and Buildings
95,000
12% Debentures of RO 10 each
50,000 Plant and Machinery
55,000
Bank Loan
30,000 Furniture
15,000
Creditors
20,000 Stock
10,000
Debtors
15,000
Bank Balance
10,000
Profit and Loss Account
20,000
220,000
220,000
Due to continuous decrease in the overall performance of the company, it was decided to
liquidate the company and form a new company by the name Dhofar Machinery (New)
Company to take over the business as on 1.1.2013. The new company agreed to take over the
assets and liabilities at the following agreed amount:
Land and Building at RO 112,000; Plant and Machinery at RO 35,000; Furniture at RO
13,000; Stock at RO 9,000; Debtors at 12,000; bank loan at RO 32,000; creditors at RO
21,000.
Purchase consideration is to be discharged by the issue of equity shares of RO 10 each.
Pass journal entries and Realization account in the books of Dhofar Machinery Company and
journal entries and opening balance sheet in the books of Dhofar Machinery New Company.
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4.
New Star Ltd is absorbed by Sun Top Company Ltd on 1.1.2015 on which date the balance
sheet of both the companies appeared as follow:
Balance sheets of A Ltd and B Ltd
(Amount in RO)
Capital and
New Star
Sun Top
Liabilities
Ltd
Ltd.
Assets
New Star
Sun Top
Ltd
Ltd.
Share Capital:
Land and Buildings
100,000
150,000
Equity shares of
Plant and Machinery
80,000
120,000
RO10 each
130,000
200,000
General Reserve
35,000
50,000 Furniture and Fittings
20,000
30,000
Profit and Loss AC
20,000
55,000 Investments
15,000
40,000
Bank Loan
35,000
40,000 Stock
15,000
20,000
Creditors
30,000
60,000 Sundry debtors
15,000
30,000
Bank Balances
5,000
15,000
250,000
405,000
250,000
4050,000
On absorption, Sun Top Ltd agreed for the following:
4. Issue of 12,000 equity shares of RO 10 each;
5. Issue of 8000, 12% debentures of RO. 10 each at a premium of 10%; and
6. A cash payment of RO 5,000
Required:
3. Pass journal entries and prepare Realisation account in the books of New Star. Ltd;
4. Pass journal entries and prepare the Balance sheet of Sun Top Ltd.
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