Internal reconstruction

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

30 March 2012 30% of creditors were reduced to the extent of 30%.
Does it means 30% of 30%
or
does it means 70% of 30%. However,
In one of the textbook, the statement was
Creditors were reduced to the extent of Rs.100000/
Actual Creditors were Rs.160000/
The entry passed by them was
Creditors A/c Dr. 100000
To Cap. Reduction 100000
Please HELP

CA CS Amit S. Kedia

CA CS Amit S. Kedia (Expert)
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30 March 2012 It means 70% of 30%..

Querist : Anonymous

Querist : Anonymous (Querist)

31 March 2012 But Sir,
In one of the textbook,the statement was
Creditors were reduced to the extent of Rs.100000/- Actual Creditors in B/s 160000/-.They have passed the entry
Creditors A/c Dr. 100000
To Capital Reduction A/c 100000

Please Help I'm totally Confused

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CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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11 May 2012 The statement is creditors were reduced TO THE EXTENT of Rs. 1 lakh.

TO THE EXTENT means the amount of reduction.

If the statement was creditors were reduced TO Rs. 1 lakh, then the amount of reduction would have been Rs. 60,000.

Further 30% of the creditors were reduced TO THE EXTENT OF 30%.

So the amount of reduction will be 30% of 30%.

Suppose the total creditors are Rs. 1 lakhs.
30 % comes to Rs. 30,000.
Amount of reduction = 30,000*30%
or 1,00,000*30%*30% = Rs. 9,000.