Chatenays Ltd. was registered with a nominal capital of R200 000, comprising 100 000 each of...

 

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Chatenays Ltd. was registered with a nominal capital of R200 000, comprising 100 000 each of ordinary and 6% preference shares of R1 each, to purchase the established business of Abel Chatenay. The purchase price was agreed at R120 000, payable as R30 000 in cash, R40 000 in ordinary shares of R1 each, and R50 000 in 6% preference shares of R1 each. The company was to discharge the liabilities of the old firm. The balance sheet of Abel Chatenay as on the date of purchase was as follows: Capital Creditors Bank loan LIABILITIES SUMMARISED BALANCE SHEET as at 1 July 2007 R 100 000 14 040 2 000 R116 040 ASSETS Land and buildings Machinery and plant Sundry debtors Stock Cash in hand R 36 000 37 860 18 764 22 440 976 R116 040 The balance of both classes of shares was issued to the public and fully subscribed and paid up. Required Prepare the accounts necessary to record the above purchase in the company's books, and give the initial balance sheet of the new company. Chatenays Ltd. was registered with a nominal capital of R200 000, comprising 100 000 each of ordinary and 6% preference shares of R1 each, to purchase the established business of Abel Chatenay. The purchase price was agreed at R120 000, payable as R30 000 in cash, R40 000 in ordinary shares of R1 each, and R50 000 in 6% preference shares of R1 each. The company was to discharge the liabilities of the old firm. The balance sheet of Abel Chatenay as on the date of purchase was as follows: Capital Creditors Bank loan LIABILITIES SUMMARISED BALANCE SHEET as at 1 July 2007 R 100 000 14 040 2 000 R116 040 ASSETS Land and buildings Machinery and plant Sundry debtors Stock Cash in hand R 36 000 37 860 18 764 22 440 976 R116 040 The balance of both classes of shares was issued to the public and fully subscribed and paid up. Required Prepare the accounts necessary to record the above purchase in the company's books, and give the initial balance sheet of the new company.

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To record the purchase of Abel Chatenays established business by Chatenays Ltd and prepare the initi... View the full answer