LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034
B.Com. DEGREE EXAMINATION – COMMERCE
|
SIXTH SEMESTER – APRIL 2008
CO 6606 – ADV. CORPORATE ACCOUNTS
Date : 23/04/2008 Dept. No. Max. : 100 Marks
Time : 9:00 – 12:00
SECTION A
Answer All questions 10 x 2 = 20
- What do you mean by money at call and short notice?
- What is meant by bonus in reduction of premium?
- What do you understand by ‘pooling of interest’?
- Distinguish between double accounting and single accounting system.
- Write short note on net payment method of purchase consideration.
- From the following , you are required to calculate the amount of claims to be shown
in the revenue account for year ending 31.12.2005.
Claims paid in 2005 Rs. 3,06,000; Claim on account of re-insurance was Rs. 75,000;
Claim outstanding for 2004 Rs. 45,000;Claims outstanding for the year 2005
Rs. 36,000.
- Under which schedule of the Bank will the following items appear in the final
statement? a) Staff welfare expenses; b) Interest paid on fixed deposit; c) Interest on
balance deposited with RBI.
- While closing the books of a bank on 31st December 2003, you find in the loan
ledger as unsecured balance of Rs. 2 lakhs in the account of a merchant whose
financial condition is reported to you as bad. Interest on the same account amounted
to Rs. 20,000 during the year. During the year 2004, the bank accepted 75 paise in the
rupee on account of the debt upto 31st December 2003. Find out the amount of bad
debts.
- Calculate the amount of unrealized profit included in stock from the following
information.
Closing stock of Rs. 6,40,000 held by ‘A’ Ltd. consist of Rs. 2,40,000 goods
purchased from “B” Ltd. who charged 20% profit on sales. “A” Ltd. is the
holding company of “B” Ltd. with 80% share holding.
10.The revenue account of life insurance company shows the life assurance fund on 31st
March, 2002, at Rs. 62,21,310 before taking into account the following items:
(i) Claims covered under re-insurance Rs. 12,000 (ii) Bonus utilized in reduction of
life insurance premium Rs. 4,500 (iii) Interest accrued on securities Rs. 8,260
What is the life assurance fund after taking into account the above omissions?
SECTION B
Answer any FIVE only. 5 x 8=40
- Write short notes on (a) valuation balance sheet, (b) rebate on bill discounted,
(c) minority interest , (d) re-insurance
- Give the format of Profit & Loss account prescribed in Banking Regulation Act.
- Bright Electricity Ltd. earned a profit of RS. 26,95,000 for the year ended
31st March 2002 after debenture interest at 14% on Rs. 5,00,000. Calculate
the reasonable return after taking into consideration the following facts also:
Fixed assets (original cost) 2,00,00,000
Formation and other expenses 10,00,000
Monthly average of current assets(net) 50,00,000
Reserve fund(represented by 8% Government securities) 20,00,000
Contingencies reserve investments 5,00,000
Loan from Electricity Board 30,00,000
Total depreciation on fixed assets, written off to date 40,00,000
Tariffs and dividends control reserve 1,00,000
Security deposits received from customers 4,00,000
Assume the bank rate to be 10%
- X Ltd. agreed to acquire the business of Y Ltd. as on 31.12.1999. The summary of
the Balance Sheet of Y Ltd. on that date was as follows:-
Rs. Rs.
Equity Shares of Rs. 10 cash 6,00,000 Goodwill 1,00,000
General Reserve 1,70,000 Land & Bldg 6,40,000
Profit & Loss A/c. 1,10,000 Stock 1,68,000
6% Debentures 1,00,000 Debtors 36,000
Creditors 20,000 Cash 56,000
————- ————
10,00,000 10,00,000
The consideration payable to X Ltd. was agreed as follows:
- a cash payment of Rs. 2.50 for every share in Y Ltd.
- Issue of 9000 equity shares of Rs. 10/- fully paid in X Ltd. having a agreed value of Rs. 15 per share.
- Issue of such an amount of fully paid 5% Debentures of X Ltd. at 96% as is sufficient to discharge 6% debentures of Y Ltd. at a premium of 20%
Assets are revalued by X Ltd. as follows:
Land & Building Rs. 12,00,000
Stock Rs. 1,42,000
Debtors at book value less 5% for doubtful debtors
Prepare the realisation account in the books of Y Ltd.
- Life insurance gets its valuation made once in every two years. It’s life assurance
fund on 31.12.96 stood at Rs. 55,55,000 before providing for Rs. 55,000, being
shareholders dividend for 1996. Its acturial valuation on 31.12.96 disclosed a net
liability of Rs. 35,00,000. An interim bonus of Rs. 1,00,000 was paid to the policy
holders during the previous two years. You are required to show (a) Valuation Balance Sheet (b)Net
Profit for the period and (c) The distribution of the surplus.
- The following is an extract from Trial balance of a Bank as on 31.3.2005.
| Debit
Rs. |
Credit
Rs. |
|
| Bill discounted
Rebate on Bill discounted 1.04.04 Discounted Received |
50,00,000 |
20,057 1,50,000 |
| Date | Bill amount (Rs.) | Period of Bill | Rate of Discount p.a |
| 02.01.05
15.02.05 03.03.05
|
1,00,000
40,000 30,000
|
90 days
60 days 30 days
|
7%
12% 11% |
Calculate the amount of unexpired discount and pass the necessary adjusting journal
entries from the above information.
- From the following particulars prepare the Fire Revenue Account for 1998.
Claims paid Rs. 2,35,000
Legal expenses regarding claims 5,000
Premium received 6,00,000
Re insurance premium 60,000
Commission 1,00,000
Expenses of management 1,50,000
Provision against unexpired risk on 1.1.98 2,60,000
Claims unpaid on 1.1.98 20,000
Claims unpaid on 31.12.98 35,000
- On 31st March 2006, the Balance Sheet of Y Ltd. Stood as follows:
Liabilities Assets
Share capital 60,000 equity shares Machinery Rs. 5,50,000
of Rs. 10 each fully paid Rs. 6,00,000 Furniture 1,35,200
Capital Reserve 13,000 Stock 3,15,800
Foreign Project Reserve 9,700 Debtors 1,29,300
General Reserve 75,350 Cash at Bank 74,360
P & L Account 24,130
3,000 11% Debentures 3,00,000
Creditors 1,82,480
—————— —————–
12,04,660 12,04,660
On this date, Y Ltd. was absorbed by X Ltd. The scheme of absorption provided that share holders of Y Ltd. would get 110 shares of X Ltd. of Rs. 100 each for every 100 shares held in Y Ltd. and 3,000 11% debentures of Y Ltd. would be converted into equal number of 12% debentures of X Ltd. of Rs. 100 each. You are required to pass journal entries in the books of X Ltd. assuming that the absorption is in the nature of merger.
SECTION C (2 x 20 = 40)
Answer any Two only
- From the following Trial Balance of Chennai Bank Ltd., prepare the final accounts
for the year ending 31.12.2002.
Money at call Rs. 8,00,000 Share Capital Rs. 20,00,000
Cash in hand & RBI 6,50,000 Reserve Fund 6,00,000
Investments 18,50,000 Deposits 25,00,000
Loans 15,00,000 Short loans 5,00,000
Cash Credits 5,00,000 Interest & discount 8,00,000
Premises 5,80,000 Commission 1,70,000
Furniture 1,20,000 Locker rent 60,000
Interest paid 3,00,000 P/L(1.1.2002) 20,000
Salaries 2,15,000
Non Banking assets 80,000
Audit fees 30,000
Other expenses 25,000
—————- ————-
66,50,000 66,50,000
- a) Provide Rs. 20,000/- for doubtful debts and Rs. 40,000/- for taxes.
- b) Provide Rs. 10,000/- for rebate on bills discounted.
- c) Acceptances on behalf of the customers accounted to Rs. 4,00,000/-
- d) Depreciate furniture 10% p.a.
- e) Directors propose 5% dividend.
- Following are the Balance sheets of A Ltd. and B Ltd. as on 31.03.2002.
A Ltd.
| Particulars | Rs. | Particulars | Rs. |
| Share Capital
40,000 Equity shares of Rs. 100 each General Reserve Current Liabilities |
40,00,000 30,00,000 30,00,000 1,00,00,000 |
Fixed Assets
Investments Current assets |
30,00,000
5,00,000 65,00,000
__________ 1,00,00,000
|
B Ltd.
| Particulars | Rs. | Particulars | Rs. |
| Share Capital
20,000Equity shares of Rs. 50 each General Reserve Current Liabilities Provision for tax Proposed dividend
|
10,00,000 5,00,000 1,00,000 1,00,000 1,00,000 18,00,000 |
Goodwill
Fixed assets Current assets |
50,000
3,50,000 14,00,000
__________ 18,00,000 |
B Ltd. is to be absorbed by A Ltd. on the following terms:
(i) B Ltd. declares a dividend of 10% before absorption for the payment of
Which it is to retain sufficient amount of cash.
(ii) The net worth of B Ltd. is valued at Rs. 14,50,000
(iii) The purchase consideration is satisfied by the issue of fully paid-up shares
Of Rs. 100 each in A Ltd.
Following further information is also to be taken into consideration:
- A Ltd. holds 5,000 shares of B Ltd. at a cost of Rs. 3,00,000
- The stocks of B Ltd. include items valued at Rs. 1,00,000 purchased from A Ltd. (cost to A Ltd.Rs. 75,000)
- The creditors of B Ltd. include Rs. 50,000 due to A Ltd.
Show ledger accounts in the books of B Ltd. to give effect to the above and Balance
Sheet of A Ltd. after completion of the absorption.
- Big Ltd. purchased control of Small Ltd. on 1.7.2004. Following are the Balance
Sheets of the two companies at 31.12.2004
| Liabilities | Big. Ltd. | Small
Ltd. |
Assets | Big. Ltd. | Small
Ltd. |
| Equity share capital of Rs. 10 each
General Reserve P & L A/c Creditors Bills payable to Big Ltd. Contingent liability of Big Ltd. for Rs. 9,000 for bills discounted |
3,60,000 36,000 60,000 60,000 __
_______ 5,16,000 |
1,80,000 30,000 60,000 42,000
6,000
________ 3,18,000 |
Goodwill
Building Machinery Stock in trade Debtors Investment in 13,500 shares of Small Ltd. Cash at bank
|
6,000
60,000 1,20,000 70,500 30,000
2,02,500 27,000
________ 5,16,000 |
24,000
60,000 1,08,000 60,000 54,000
12,000
________ 3,18,000 |
Small Ltd. had on 1.1.2004 Rs. 30,000 in General Reserve and Rs. 36,000(Cr.) in Profit and Loss Account. 10% dividend was received by Big. Ltd. in July from Small Ltd. for 2003 and this amount was credited to Profit and Loss Account of holding company. Machinery standing in the books of Small Ltd. at Rs. 1,20,000 on the date of purchase was revalued at Rs. 1,44,000. Stock of Small Ltd. includes Rs. 9,600 received from Big Ltd. on which it made a profit of 25% on cost.
Prepare the Consolidated Balance Sheet.
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