Question 2 Following is the Balance Sheet of Tourma Limited as at 31st March,2023: ParticularsNotesin lakhs Equity and Liabilities 1. Shareholders' funds A. Share Capital124.00 B. Reserves and Surplus2(9.10) 2. Non-current liabilities A. Long-term borrowings33.20 3. Current liabilities A. Trade Payables1.15 B. Short Term Borrowings – Bank Overdraft1.40 C. Other current liabilities40.32 D. Short term provisions50.42 Total21.39 Assets 1. Non-current assets A. Property, Plant and Equipment67.80 B. Intangible Assets71.70 C. Non-Current Investments81.80 2. Current Assets A. Inventory5.12 B. Trade receivables4.32 C. Cash and cash equivalents0.65 Total21.39 Notes to Accounts: in lakhs 1Share Capital Equity share capital 16,000 Equity Shares of ₹100 each16.00 8,000 6% Preference Shares of ₹100 each8.00 24.00 2Reserves and Surplus Debit balance of Profit and loss Account(9.10) (9.10) 3Long-term borrowings 3,200 10% Debentures3.20 3.20 4Other current liabilities Interest payable on debentures0.32 0.32 5Short term provisions Provision for taxation0.42 0.42 6Property, Plant and Equipment Plant & Machinery5.00 Furniture & Fixture2.80 7.80 7Intangible Assets Patents & Copyrights1.70 1.70 8Non-current Investments Investments (Market Value ₹1,10,000)1.80 1.80 As on 1st April,2023, the following scheme of reconstruction was finalized for which necessary resolution was passed and approvals were obtained from appropriate authorities. Accordingly, it was decided that: (i) Each equity share is to be sub-divided into ten fully paid-up equity shares of ₹ 10 each. After sub-division, each shareholder shall surrender to the company 40 % of his holding, for the purpose of reissue to trade payables as necessary. (ii) Preference shareholders would give up 30% of their capital and 12% Debentures (face value ₹ 100 each) shall be issued to them for balance holdings. (iii) The company would issue additional 12% Debentures (face value ₹ 100 each) for ₹4,00,000 for meeting its working capital requirement and final settlement of Bank Overdraft at 90% of the amount. (iv) Existing debenture holders would accept Furniture & Fixture in full settlement of their dues. (v) Trade payables claim shall be reduced to 70%, it is to be settled by the issue of equity shares of ₹ 10 each out of shares surrendered. (vi) The shares surrendered and not re-issued shall be cancelled. (vii) The taxation liability is to be settled at 50,000. (viii) Investments value to be reduced to market price. (ix) Balance of profit and loss account is to be written off. (x) The value of inventories is to be increased by ₹32,000 and provision for Doubtful Debts is to be created at 5% of Trade Receivables. You are required to: (i) Pass necessary journal entries in the books of account of Tourma Limited. (ii) Prepare Reconstruction Account, and (iii) Prepare Balance Sheet of the company after internal reconstruction.