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INTERNAL RECONSTRUCTION

Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 Mohammed Aarif asked about 3 years ago

what is the JOURNAL ENTRY WITH LOGIC?,When surrendered shares are reissued to settle an unrecorded liability during internal reconstruction?....

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 narahari answered almost 3 years ago

Capital Reduction / Reconstruction a/c (Dr) To Equity Share Capital A/c (Being issue of ________ Nos of Equity shares of Rs.____/- for arrears of preference dividend) Like the same, Unrecorded liability is also not reflected in the balance sheet, so settlement of unrecorded liabilities by issuing the equity shares of the company with the same journal entry.

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Open uri20170510 32134 1mvafsl?1494421640 karthick answered about 3 years ago

It is like settling the arrears of preference dividend to the preference share holders. The arrears of preference dividend is not reflected in the balance sheet. at the time of Internal reconstruction, the arrears in preference dividend to be converted into equity shares by passing the below entry. Capital Reduction / Reconstruction a/c (Dr) To Equity Share Capital A/c (Being issue of ________ Nos of Equity shares of Rs.____/- for arrears of preference dividend) Like the same, Unrecorded liability is also not reflected in the balance sheet, so settlement of unrecorded liabilities by issuing the equity shares of the company with the same journal entry. Capital Reduction / Reconstruction a/c (Dr) To Equity Share Capital A/c (Being issue of ________ Nos of Equity shares of Rs.____/- for unrecorded liabilities)

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