Question: A, Β and C were three companies engaged in the same trade and all preparing accounts annually to 31st March; the following statement summarises their respective balance sheets as on 31st March, 1960:
It was agreed between the directors that it would be in the common interests of all that the three undertakings should come under common control and that this should be done as follows: As regards B, A should make an offer to buy the whole of its shares from the existing members. As regards C, the company should be wound up and A should buy all its assets from the Liquidator.
These proposals were duly approved and put into effect. A offered to the ordinary shareholders of Β ten of its own shares taken as valued at 22/6d each and £4 in cash for each ten shares of B, and this offer was accepted in respect of all except 5,000 shares of B. The liquidator of C sold all that company's assets to A, all at book values except for the goodwill, for £51,000, which was settled as to £6,000 in cash (out of which the liquidator paid the company's creditors) and as to the balance by the issue of 40,000 new shares of A valued at 22/6d per share. Record the foregoing transactions in the form of journal entries in the books of A and draw up a balance sheet showing the position of A (only) after completion.