LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034

B.Com. DEGREE EXAMINATION – COMMERCE

SIXTH SEMESTER – APRIL 2011

CO 6606 – ADV. CORPORATE ACCOUNTS

 

 

 

Date : 09-04-2011              Dept. No.                                        Max. : 100 Marks

Time : 9:00 – 12:00

 

PART – A

ANSWER ALL THE QUESTIONS:                                                                        (10 X 2=20)

1. Explain the meaning of double insurance.
2. Explain what is non- performing assets?
3. Write a short note on minority interest.
4. Write a note on purchase consideration.
5. What is meant by double account system?
6. A life assurance co. prepared its revenue account for the year ended 31.12.2007 and ascertained its life assurance fund to be 28,35,000. It was found later that the following has been omitted from the accounts.
7. Interest accrued on investments Rs.39000; income tax liable to be deducted thereon is estimated to be Rs.10500.
8. Outstanding premiums Rs.32800.
9. Bonus utilized for reducation of premium Rs. 6750
10. Claims intimated but not admitted Rs. 17400.
11. Claims covered under reinsurance Rs. 6500.

What is the true life assurance fund?

7. On 31^st march 2008 bharat commercial bank ltd. Finds its advances classified as follows:

Rs.

Standard assets                                         1491300

Substandard assets                                    92800

Doubtful assets(secured):

Doubtful for one year                               25660

Doubtful for one year to three years         15640

Doubtful for more than three years          6580

Loss assets                                                            10350

Calculate the amount of provisions to be made by the bank against the above mentioned advances.

8. Raman ltd. Agrees to purchase the business of Krishnan ltd. On the following terms.
   1. For each of the 10000 shares of Rs.10 each in Krishnan ltd, two shares of raman ltd. Of Rs.10 each will be issued at an agreed value of Rs.12 per share. In addition Rs.4 per share in cash also will be paid.
   2. 8% debentures worth 80000 will be issued to settle the Rs.60000 9% debentures in Krishnan ltd.
   3. 10000 will be paid towards expense of winding up.

Calculate the purchase consideration.

9. The trial balance of the ABC bank ltd. As on 30.6.2004 shows the following balances.

Interest and discount                                           45,40,600

Rebate on bill discounted (1.7.2003)                  4750

Bills discounted and purchased                          3,37,400

The unexpired discount as on 30.06.2004 is estimated to be 5560. Draft necessary adjusting entries and calculate the amount of interest and discount to be credited to profit and loss account.

10. Explain cost of control.

 

 

PART – B

ANSWER ANY FIVE QUESTIONS:                                                          (5 X 8=40)

11. Distinguish between amalgamation, absorption and external reconstruction with suitable examples.
12. Explain the various schedules to be prepared by a commercial bank.
13. What are the advantages and disadvantages of double account system?
14. From the following particulars prepare a profit and loss account of new bank ltd. For the year ended 31.12.2006.

Particulars                                Rs.(000’s)                      Particulars                 Rs.(000’s)

Interest of loans                               260                           interest on cash credits            225

Interest on fixed Deposits                           280                           Rent and taxes                                      20

Debit on bills discounted                   50                           interest on over drafts               56

Commission charged to customers      9                           directors and auditors fees          4

Establishment expenses                     56                           interest on savings account       70

Discount on bill discounted             200                           postage and telegram                  2

Interest on current account                45                           sundry charges                            2

Printing and advertisement                  3

15. The balance sheets of C ltd and D ltd as at 31.12.2006 were as follows:

LIABILITIES	C LTD.(Rs)	D LTD.(Rs)	ASSETS	C LTD.(Rs)	D LTD.(Rs)
Sh. Capital (in shares of Rs.10 each)	200000	100000	Sundry assets	132500	138200
General reserve	18000	20000	Good will	———	20000
Profit and loss a/c	24500	23000	Shares in D ltd at cost	140000	——-
creditors	30000	15200
	272500	158200		272500	158200

In the case of D ltd. Profit for the year ended 31.12.2006 is Rs 12000 and transfer to reserve is Rs. 5000. The holding of C ltd. In D ltd. Is 90% acquired on 30^th June 2006. Draft a consolidated balance sheet of C ltd and its subsidiary.

 

 

 

 

16. From the following balance sheet of Sam ltd. As on 31.3.2004

LIABILITIES	Rs	ASSETS	Rs.
Sh. Capital: 8% pref sh. Of Rs100 each.	375000	Fixed assets	1625000
Equity shares of Rs.10 each	750000	Investments	300000
General reserve	450000	Current assets	250000
7% debentures	350000
Current liabilities	250000
	2175000		2175000

1. ltd agreed to take over the business of Sam ltd.

Calculate the purchase consideration under net assets method on the basis of the following:

• R ltd agreed to discharge 7% debentures at a premium of 10% by issuing 9% debentures of R ltd.
• Fixed assets are to be valued at 10% above book value, the investments at par, current assets at 10% discount and current liabilities at book value.

 

17. From the following particulars relating to Z insurance co. ltd. Prepare fire revenue account for the year ending 31.12.2004.

Rs.                                                                   Rs.

Claims paid                                               480000              premium received     1200000

Claims outstanding on 1.1.04                   40000               reinsurance prem.pd.  120000

Claims intimated but not accepted

And paid on 31.12.2004                           10000              commission                200000

Claims intimated and accepted

but not paid on 31.12.2004                       60000             commission on

reinsurance ceded       10000

commission on reinsurance accepted        5000                provision for

unexpired risk on

1.1.04                          400000

Expenses of management                                     305000

Bonus in reduction of premium                12000              additional provision

For unexpired risk on

1.1.04                          20000

You are required to provide for additional reserve for unexpired risk at 1% of net premium in addition to the opening balance.

18. A life insurance co. gets its valuation made once in every two years. Its life assurance fund on 31.3.08 amounted to 63,84,000 before providing Rs.64000 for the shareholders dividend for the year 2007 – 2008. Its actuarial valuation due on 31.3.08 disclosed a net liability of Rs.6080000 under assurance annuity contracts. An interim bonus of Rs 80000 was paid to the policy holders during the two years ending 31.03.08. prepare a statement showing the amount now available as bonus to policy holders.

PART – C

ANSWER ANY TWO QUESTIONS:                                                          (20 X 2=40)

19. From the following balances of united general insurance company ltd. As on 31.12.08 prepare a) fire revenue account; b) marine revenue account and c) profit and loss account.

Provision for unexpired risk On 1.1.08 – fire Marine	500000 1640000	Interest, dividend received	28000
Additional reserve on 1.1.08 Fire	100000	Difference in exchange(cr)	600
Bad debts – fire marine	10000 24000	Miscellaneous receipts	10000
Auditors fees	2400	Profit on sale of land	120000
Directors fees	10000	Premium received – fire Marine	1200000 2160000
Share transfer fees	1600	Expenses of management – fire Marine	290000 800000
Bad debts recovered	2400	Commission earned on reinsurance Ceded – fire Marine	60000 120000
Claims paid and outstanding Fire Marine	380000 760000
Commission paid – fire Marine	180000 216000
depreciation	70000

Provision for unexpired risk is to be kept at 50% of the premiums received for fire and at 100% for marine departments. The additional reserve in case of fire insurance is to be increased by 5% of the net premiums.

 

20. The following balance sheets are presented to you:

Balance sheet as on 31.12.2009

LIABILITIES	A.Ltd. Rs.	B.Ltd. Rs.	ASSETS	A.Ltd. Rs.	B.Ltd. Rs.
Sh. Capital: Shares of Rs.50 each	250000	100000	Fixed Assets	175000	75000
General reserve	50000	——–	Stock in trade	45000	20000
Profit and loss account	40000	——–	Debtors	30000	15000
6% debentures	——-	50000	6% debentures in B ltd Acquired at par	30000	——-
Trade creditors	37500	22500	Shares in B ltd 1500 @ Rs 40	60000	——-
			Cash at Bank	37500	12500
			Profit and Loss account	——–	50000
	377500	172500		377500	172500

A ltd. acquired the shares on 1.4.09. The profit and loss account of B ltd showed a debit balance of Rs.75000 on 1.1.09. Trade creditors of B ltd include Rs.10000 for goods supplied by A ltd on which A ltd made a profit of Rs 1000. Half of the goods were still in stock on 31.12.09. Prepare the consolidated balance sheet.

 

21. From the following particulars of XYZ bank ltd having its own premises, prepare the balance sheet in the prescribed form as on 31.12.2010.

particulars	Rs.in 000’s	particulars	Rs.in 000’s
Authorized capital	4000	Letters of credit issued	500
Subscribed capital 4 lakh shares of Rs.10 each Rs.5 paid	2000	Telegraphic transfers payable	800
investments	7000	Bank drafts payable	1200
Bills discounted (in India)	15000	Short loans	40
Profit and loss(cr)	850	Rebate on bills discounted	10
Endorsement on bills for collection	100	Acceptances for customers	5000
Liability of customers for acceptances	5000	Loans and advances	10000
Money at call on short notice	9000	Cash credits	10000
Cash in hand	2000	overdrafts	1000
Cash with RBI	4000	Bills purchased(payable ouside india)	1000
Reserve	3000	Current and deposit accounts	56000
Cash with SBI	4000	Investment fluctuation fund	100
		Bills for collection	100

 

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