2007 Gujarat University B.Com Adv. Accountancy and Auditing (Subsidiary) Question paper
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Paper-I
(New Course)
Time : 3 Hours] [Max. Marks : 70
Instructions : (1) All questions carry equal marks.
(2) Show necessary calculations as of part answer.
1. Basu Ltd., issued 35,000 Equity Shares of Rs. 100 each at a premium of 10%. Amount
called up per share is as under :
On Application – Rs. 20, on Allotment – Rs. 40 (including premium), on First and
Final Call – Rs. 50
Applications were received for 55,000 shares, applications of 45,000 shares were
allotted shares on prorata basis and remaining applications were refused. The excess
money received on applications were adjusted to sum due on allotment.
Nivesh who was allotted 350 shares failed to pay allotment money and his shares
were forfeited immediately after allotment.
Aparna who was applied for 675 shares, failed to pay call money and her shares
were forfeited.
On the above forfeited shares 60% shares were reissued as fully paid at Rs. 8, the
whole of Nivesh’s shares being included.
Pass necessary journal entries to record the above transactions in the books of
Basu Ltd.
OR
(A) Anjana Ltd., has taken over the running business of Karan Brothers except debtors
and creditors worth Rs. 2,40,000 and Rs. 1,20,000 respectively.
The company agreed to collect debtors and make payment to creditors on
behalf of the firm and charge commission at 2% on the amount collected from
debtors and 50% of the discount received from creditors.
The company collected Rs. 1,80,000 in cash after a bad debt of Rs. 15,600
and a discount of Rs. 1,200 from debtors and 80% creditors have been paid off at
10% discount.
The company also collected Rs. 12,000 in cash from debtors whose account
was written off as bad debt in past. The company paid the amount due to the firm.
Pass necessary entries in the books of company.
(B) Janak Ltd., purchased the business from Janki Bros for Rs. 3,50,000. Purchase
consideration is satisfied as under :
Equity Shares of Rs. 10 each at 20% premium and 9% debentures of
Rs. 100 each in the proportion of 4 : 1 and Rs. 50,000 in cash.
Pass journal entries in the books of purchase company.
2. A company issued 75,000 shares of Rs. 100 each. The whole issue was fully
underwritten by Chetan, Sonal and Nilay as follows :
Chetan 45,000 shares, Sonal 18,000 shares, Nilay 12,000 shares.
In addition to the above underwriting, there was firm underwriting as follows :
Chetan 6,000 shares, Sonal 2,200 shares, Nilay 7,500 shares.
The total subscriptions including marked applications were for 55,000 shares. The
marked applications were as follows :
Chetan 7,500 shares, Sonal 14,600 shares, Nilay 2,900 shares.
It was agreed that underwriters be paid commission at 5% on the issue price.
From the above information, find out the liabilities of individual underwriters and
give necessary journal entries in the books of the company.
OR
Write short note on : (any two)
(i) Profit prior to incorporation.
(ii) Discuss the Accounting Standard – 1 about Fundamental Accounting Assumptions.
(iii) Accounting Standard – 9 about Revenue Recognition.
(iv) Meaning and importance of Accounting Standard.
3. The Balance Sheet of Vasant Ltd., as on 31-12-2006 is as follows :
Liabilities Rs. Assets Rs.
Equity Shares of Rs. 100 each 9,60,000 Goodwill 2,50,000
8% Cum. Pref. Shares of Rs. 100 4,80,000 Land & Building 3,20,000
Securities premium 40,000 Machinery 4,80,000
12% Debentures 2,00,000 Investments 3,00,000
Outstanding Debenture’s interest 48,000 Stock 2,00,000
Director’s Loan 80,000 Debtors 1,00,000
Creditors 1,60,000 Cash 56,000
Contingent Liab.
Cum. Pref. Share dividend in
arrears for two years.
Profit & Loss A/c
Preliminary Expenses
2,00,000
62,000
19,68,000 19,68,000
Prepare Balance Sheet after capital reduction and write journal entries in order to
implement the capital reduction scheme on 1-1-2007.
FC-12 9 P.T.O.
(1) The value of Equity Shares will be considered as Rs. 35 fully paid up.
(2) 9% Pref. Shares of Rs. 100 each fully paid in exchange of two 8% Cum. Pref.
Shares.
(3) Preference Shareholders agreed to waive half of their arrears of dividend and for
the remaining amount they agreed to accept the investments of Rs. 32,000.
(4) Write off Land and Building Rs. 1,20,000 and 60% of machinery.
(5) Write off intangible and fictitious assets.
(6) Debenture-holders agreed to waive their accrued and due interest.
OR
On 31-12-2006 the Balance Sheet of Anamika Ltd., is as follows :
Liabilities Rs. Assets Rs.
24,000 Equity Shares of Rs. 10
each
2,40,000 Land & Building 2,20,000
600, 10% Redeemable Pref.
Shares of Rs. 100 each fully
paid up.
60,000 Machinery 50,000
600, 8% Redeemable Pref.
Shares of Rs. 100 each, Rs. 80
per share paid up
48,000 Furniture 30,000
Securities Premium 6,000 Investments 30,000
General Reserve 45,000 Stock 70,000
Profit & Loss A/c 21,000 Debtors 35,000
Creditors 30,000 Cash 33,000
Bills Payable 18,000
4,68,000 4,68,000
On this date the company decided to redeem both the classes of Pref. Shares at
10% premium after complying with the provisions laid down under Sec. 80 of the
Companies Act, 1956.
For this purpose, necessary number of Equity Shares of Rs. 100 each are issued at
par. Cash balance of Rs. 18,000 is to be maintained in the business. All the investments
are sold away for Rs. 36,000. All the Pref. Shareholders are paid in full. The company
then decided to utilize the resultant reserve created out of the redemption of Pref.
Shares for issuing fully paid Bonus Shares to Equity Shareholders.
Pass necessary journal entries in the books of Anamika Ltd.
4. The following is the Trial Balance of Arjun Ltd., as on 31-3-2006. You are required to
prepare Vertical Annual Accounts of the Company.
Particulars Debit Rs. Particulars Credit Rs.
Land & Building 1,46,160 16,800 Equity Shares
of Rs. 10 each
1,68,000
Investment in Krishna Ltd., 340
Equity Shares of Rs. 10 each
Rs. 5 paid up
1,700 5% Redeemable Pref.
Shares of Rs. 100 each
1,68,000
Machinery 29,400 Sales 1,41,000
Preliminary Exps. 5,000 Creditors 29,520
Goodwill 33,600 Bad debts Reserve 2,520
Bank Balance 1,355
Opening Stock 45,360
Debtors (out of which Rs. 5,000
are for more than six months)
33,180
Purchases 1,32,720
Director’s fee 3,360
Wages 16,800
Carriage inward 1,000
Bad debts 3,520
Bank expenses 193
General expenses 6,720
Rent and Taxes 3,360
Salary 5,262
Carriage outward 2,350
Motor car 5,000
Profit and Loss A/c 33,000
5,09,040 5,09,040
(1) The authorized capital of Arjun Ltd., 20,000 Equity Shares of Rs. 10 each and
2,000 5% Redeemable Pref. Shares of Rs. 100 each.
(2) The closing stock is valued at Rs. 60,000.
(3) Due to mistake purchases include the purchase of machinery worth Rs. 1,680
purchased on 31-3-06.
(4) It was sought that debit sale worth Rs. 340 was made on 31-3-06, but it was not
recorded in the books of accounts, however, it was duly accounted for in closing
stock.
(5) Write off preliminary expenses by 10%.
(6) Increase bad debts reserve upto Rs. 3,360 prepaid rent and taxes were Rs. 1,300.
(7) Depreciate machinery by 10% and motor car by 20%.
(8) Purchase book includes the purchase of old motor car worth Rs. 15,000.
OR
Karam Insurance Co. Ltd., presents the following information regarding Fire and
Marine Insurance for the year ended 31-12-2006.
Fire Marine
Particulars
Rs. Rs.
Reserve for unexpired risk 31-12-05 9,45,000 12,15,000
Claim paid during the year 5,40,000 4,05,000
Liabilities for outstanding claims
as on 31-12-2005 67,500 81,000
31-12-2006 1,08,000 54,000
Depreciation 15,000 7,500
General Administration exps. 22,500 15,000
Premium on Re-insurance accepted 2,02,500 1,35,000
Premium on Re-insurance ceded 1,35,000 1,08,000
Commission on Re-insurance accepted 40,500 27,000
Commission on Re-insurance ceded 27,000 21,600
Legal expenses 36,000 24,000
Profit on sale of motor car 27,000 –
Premium received 16,20,000 10,80,000
Commission 94,500 87,750
Re-insurance recoveries 81,000 67,500
Salary 30,000 22,500
Audit fee 15,000 9,000
Stationery, Postage 7,500 6,000
Interest and Dividend 67,500 54,000
Taxes on Interest and Dividend 30% 30%
Other Information :
(1) Every year additional reserve is maintained at 50% of reserve for unexpired risk.
(2) Premium outstanding.
Date Fire Marine
31-12-2005 2,02,500 54,000
31-12-2006 1,35,000 27,000
Prepare Revenue Accounts for both departments.
5. For each of the following sub-questions more than one answer are given. You are
requested to select the correct answer with necessary calculations or explanation for it.
(any five)
(1) A company issued 1,00,000 Equity Shares of Rs. 10 each on which Rs. 7.50 per
share is paid up. (Rs. 2.50 on application, Rs. 2.50 on allotment and Rs. 2.50 on
first call) The company forfeits 1,000 shares held by Shri Nisant for non-payment
of first call of these shares, it re-issues 700 shares at Rs. 4.50 per share. The
amount to be transferred to Capital Reserve Account is
(i) Rs. 3,100 (ii) Rs. 1,400
(iii) Rs. 6,000 (iv) Rs. 2,100
(2) If adjusted purchases are Rs. 4,00,000, sales Rs. 5,00,000, opening stock
Rs. 1,00,000 and closing stock Rs. 1,50,000, then rate of Gross Profit on sale is
(i) 25% (ii) 20%
(iii) 40% (iv) 30%
(3) The revenue account of Marine Department of Asha Insurance Company showed
the profit of Rs. 68,000 before taking into account the following items :
Rs.
– Claims intimated but not accepted 89,080
– Outstanding Premium 24,480
– Interest accrued on investment 26,520
– Claims covered under re-insurance 36,720
The adjusted profit will be
(i) Rs. 54,400 (ii) Rs. 35,200
(iii) Rs. 67,000 (iv) Rs. 65,180
(4) In order to redeem, Redeemable Pref. Shares of Rs. 65,000 at a premium of 10%
and new Equity Shares of Rs. 65,000 are issued at a premium of 5%, then the
amount to be transferred to Capital Redemption Reserve Fund will be
(i) Rs. 65,000 (ii) Rs. 71,500
(iii) Rs. 68,250 (iv) Rs.
(iii) Rs. 68,250 (iv) Rs. Zero
(5) Use of Bonus cannot be made for making partly paid shares fully paid from
(i) Profit and Loss A/c (ii) General Reserve A/c
(iii) Securities Premium (iv) Dividend Equalisation Fund
(6) Depreciation is calculated on the fixed asset purchased by company in
(i) Pre-Incorporation Period
(ii) Post Incorporation period
(iii) 1 : 2 ratio
(iv) Time ratio
(7) The accounting standard-6 Depreciation Accounting does not apply to the
following :
(i) Land & Building (ii) Furniture
(iii) Goodwill (iv) Machinery
_______________
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