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Posted By: Jyothi Member Level: Diamond Posted Date: 22 May 2008
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2006 Acharya Nagarjuna University B.Com Part II - Commerce, Paper III - CORPORATE ACCOUNTING - Dec 2006 Question paper
B.Com. DEGREE EXAMINATION, DECEMBER 2006
(Examination at the end of Final Year)
Part II - Commerce
Paper III - CORPORATE ACCOUNTING
Time : Three hours Maximum : 100 marks
SECTION A - (4 X 5 = 20 marks)
Answer any FOUR of the following questions.
1. Discuss the impact of International Accounting standards on Indian Accounting Standards.
2. State the circumstances under which valuation of shares necessary.
3. What are the redeemable preference shares?
4. Distinguish between Amalgamation and Absorption.
5. What do you mean by statement of affairs?
6. Explain about rebate on bills discounted.
7. Briefly explain about Insurable Interest.
8. What do you mean by profit prior to incorporation?
SECTION B - (2 X 10 marks)
Answer any TWO of the following.
9. From the following particulars relating to the business of Mr. X. Compute the value of goodwill on the basis of three years purchase of super profits taking average of last four years:
Capital invested Rs.30,000
Market rate of interest on investment 12%
Rate of risk return on capital invested 3%
Managerial remuneration of the proprietor if employed elsewhere 7,500 p.a.
Trading result:
2002 Profit 15,000
2003 Profit 18,000
2004 Loss 2,000
2005 Profit 22,000
10. Modern Fibres Ltd. has 1,000, 10% redeemable preference shares of Rs.100 each fully paid. The company decides to redeem the shares on December 31, 2004 at a premium of 5%. It has a credit balance of Rs.4,00,000 in the profit and loss account. Following issues were made on 1st March, 2005.
(a) 10,000 equity shares of Rs.10 each at a premium of 10%.
(b) 1,000, 6% debentures of Rs.100 each.
Both were fully subscribed and the amount is received in full. Subsequently the preference shares were redeemed appropriating full amount of the issue and the balance and profit and loss account.
Give journal entries to complete the redemption process.
11. The following particulars relate to a company which has gone into liquidation. You are required to prepare the liquidator.s final statement of account allowing for his remuneration of 2% on amounts paid to unsecured creditors other than preferential creditors:
Rs.
Preferential creditors 10,000
Unsecured creditors 32,000
Debentures 10,000
Assets realised Rs.39,650. Liquidation expenses amounted to Rs.1,000.
12. From the following information relating to Lakshmi Bank Ltd., prepare the profit and loss account for the year ending 31st December, 2005.
Rs.
Rent 72,000
Exchange and Commission 32,800
Interest on fixed deposit 11,00,000
Interest on savings bank 2,72,000
Interest on overdraft 2,16,000
Discount on bills discounted 7,80,000
Interest on current account 1,68,000
Interest on cash credit 8,92,000
Depreciation on bank property 20,000
Salaries and Allowance 2,18,800
Postage 5,600
Sundry charges 4,000
Directors and Auditor.s fee 16,800
Printing 8,000
Law charges 3,600
Locker rent 1,400
Transfer fees 2,800
Interest on loans 10,36,000
SECTION C - (3 X 20 = 60 marks)
Answer any THREE of the following questions.
13. The Sun Co. Ltd., acquired the whole of the shares in the Moon Co. Ltd., on 1st Jan. 2005. The Balance Sheet of the two companies as at 31st Dec. 2005 were as under.
Liabilities Sun Co. Ltd. Moon Co. Ltd. Assets Sun Co. Ltd. Moon Co. Ltd.
Rs. Rs. Rs. Rs.
Share Capital: Sundry assets 1,50,000 2,30,000
Equity shares of Rs.10 each 3,00,000 2,00,000 Investment 2,00,000
Creditors 50,000 30,000 Shares in the
Moon Co. Ltd.
at cost
3,50,000 2,30,000 3,50,000 2,30,000
Prepare the consolidated balance sheet.
14. The following figures relate to the Jupiter Insurance Society Ltd., for the year ending 31st December, 2005.
Rs.
Claims 39,000
Management expenses 14,000
Director’s fee 4,000
Doctor’s fee 3,000
Agents commission 5,000
Depreciation 4,000
Bonus is reduction of premimum 1,500
Consideration for annuities granted 16,500
Surrenders 9,000
Premiums 1,51,000
Life fund at the beginning 11,50,000
Interest 40,000
Rs.
Rent received 10,000
Claims cancelled 500
Annuities 1,500
Audit Fees 500
Prepare the Revenue Account Adjusting premium due Rs.9,000 and claims unpaid Rs.3,000.
15. Newways Limited issues 1,000, 6% debentures of Rs.100 each. Give journal entries and the balance sheet in each of the following cases:
(a) The debentures are issued and are redeemed at par.
(b) They are issued at a discount of 6% but redeemable at par.
(c) They are issued at a premimum of 5% but redeemable at par.
(d) They are issued at a discount of 4% but are redeemable at a premium of 5%.
16. From the following Balance Sheet of ABC Co. Ltd., as at 31st December, 2005, find out the
intrinsic value of each equity share.
Rs. Rs.
Share Capital: Goodwill 25,000
8% preference shares of Rs.100 each 2,00,000 Land and buildings 1,00,000
2500 equity shares of Rs.100 each 2,50,000 Plant and machinery 2,50,000
General Reserve 20,000 Stock 1,80,000
Profit and Loss a/c 25,000 Sundry debtors 50,000
9% debentures 1,00,000 Investments : 5% Govt.
Sundry creditors 30,000 Securities (face value
Rs.25,000) 30,000
Provision for tax 35,000 Cash at bank 10,000
Preliminary expenses 15,000
6,60,000 6,60,000
Goodwill should be valued at 5 years purchase of super profits. The average profit of the company for the last three years after charging income-tax is Rs.75,000. Fair return on capital employed is 10%. Assets to be revalued : Land and Building Rs.1,50,000 and plant and machinery Rs.2,00,000.
17. The following is the Balance Sheet of Dharan Co. Ltd. as on 31st December, 2005.
Liabilities Rs. Assets Rs.
13% cumulative preference shares Fixed assets 15,00,000
of Rs.100 each 1,00,000 Current assets 35,00,000
Equity shares of Rs.10 each 7,00,000 Profit and Loss a/c 3,00,000
8% debentures 3,00,000
Current liabilities 39,00,000
Provision for taxation 3,00,000
53,00,000 53,00,000
The following scheme of reorganisation is sanctioned:
(a) Fixed assets are to be written down by 33 1/3 %.
(b) Current assets are to be revalued at Rs.27,00,000.
(c) Preference shareholders decide to forgo their rights to arrears of dividend which are in arrears for three years.
(d) The taxation liability of the company is settled at Rs.4,00,000.
(e) One of the creditors of the company, to whom the company owes Rs.25,00,000, decides to forgo 50% of his claim. He is allotted 1,00,000 equity shares of Rs.5 each in part satisfaction of the balance of his claim.
(f) The rate of interest of debentures is increased to 11%. The debenture holders surrender their existing debentures of Rs.100 each and exchange the same for fresh debentures of Rs.75 each.
(g) All existing equity shares are reduced to Rs.5 each.
(h) All preference shares are reduced to Rs.75 each.
Pass journal entries and show the balance sheet of the company after giving effect to the above.
18. From the following particulars, prepare profit and loss account of Swadesh Bank Ltd., for the year ended 31st Dec. 2005.
Rs.
Interest on loans 2,60,000
Interest on fixed deposit 2,80,000
Rebate on bills discounted 50,000
Commission charged to customers 9,000
Establishment expenses 56,000
Discount on bills discounted 2,00,000
Interest on current accounts 45,000
Printing and advertisement 3,000
Interest on cash credit 2,25,000
Rent and taxes 20,000
Interest on overdraft 56,000
Directors and auditor.s fees 4,500
Interest on Saving Bank Account 70,000
Postage and telegrams 1,500
Sundry charges 1,800
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