Calculate the purchase consideration. Pass journal entries to close the books of the old partnership firm. Pass opening entries in the books of HIXESO Ltd.

Steps to Solve

1. Calculate Total Assets and Liabilities of the Partnership Firm

   First, identify the total assets and liabilities as per the partnership's balance sheet. The total assets = 3,000,000 (Building) + 1,200,000 (Machinery) + 700,000 (Stock) + 800,000 (Sundry Debtors) + 970,000 (Cash) + 180,000 (Preliminary Expenses) = 6,850,000. The total liabilities = 36,000 (Outstanding Expenses) + 25,000 (Bank Overdraft) + 24,000 (Sundry Creditors) = 85,000.

2. Calculate Net Assets

   Net assets can be calculated by subtracting total liabilities from total assets: $$ \text{Net Assets} = \text{Total Assets} - \text{Total Liabilities} = 6,850,000 - 85,000 = 6,765,000 $$

3. Calculate Purchase Consideration

   The purchase consideration consists of equity shares and cash balance.

   a) Equity shares: 6,000 equity shares at ₹100 each = ₹600,000.

   b) Calculate the balance (cash) that needs to be paid: $$ \text{Balance} = \text{Net Assets} - \text{Equity Shares} = 6,765,000 - 600,000 = 6,165,000 $$

4. Final Purchase Consideration

   Therefore, the total purchase consideration is: $$ \text{Total Purchase Consideration} = \text{Equity Shares (₹600,000)} + \text{Balance (₹6,165,000)} = 6,765,000 $$

5. Journal Entries for Closing the Old Firm

   To close the books:

   • Debit all asset accounts and credit all liability accounts amounting to ₹6,850,000.
   • Any revaluation entries for assets should also be recorded based on the new values.

6. Opening Entries for HIXESO Ltd.

   Record the opening of the new company accounts as follows:

   • Debit all assets (as newly valued).
   • Credit all liabilities.
   • Credit the Capital Accounts of the partners.