Chatenays Ltd. was registered with a nominal capital of R200 000, comprising 100 000 each of ordinary and 6%…

Chatenays Ltd. was registered with a nominal capital of R200 000, comprising 100 000 each of ordinary and 6%…

Question:

 

Transcribed Image Text:

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.

Expert Answer:

Answer rating: 100% (QA)

To record the purchase of Abel Chatenay s established business by Chatenays Ltd and prepare the init
View the full answer