LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034
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B.Com. DEGREE EXAMINATION –COMMERCE
SIXTH SEMESTER – APRIL 2007
CO 6606 – ADV. CORPORATE ACCOUNTS
Date & Time: 20/04/2007 / 9:00 – 12:00 Dept. No. Max. : 100 Marks
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SECTION: A
Answer any ten only: 10 x 2 = 20
- What is Rebate on Bills discounted?
- On 1st October 2005, Bank discounted a bill if Rs.20, 000 @ 12% p.a and the bill has on that date exactly four months to run considering the days of grace also. Accounts are closed on 31st Journalize transaction.
- State True or False:
- The Percentage of Profit to be transferred to statutory reserve by the banking company is 20%.
- Letter of Credit and Endorsement are shown in the bank accounts under the head of Contingent Liabilities.
- What is Re insurance?
- From the following particulars calculate the premiums earned to be derived in schedule 1 of a life insurance company.
Premium less reinsurance Rs.1, 61,500, Accrued Premium Rs.5, 000 and Bonus in reduction of premium not yet adjusted Rs.5, 000.
- Write short note on: Cost of Control.
- Stock of Rs.3, 20,000 held by H Ltd consists of Rs.1, 20,000 goods purchased from S Ltd who has charged Profit on Sale of 20%. H Ltd acquired 80% of shares of S Ltd. Calculate the amount of unrealized profit included in stock.
- Mention any two characteristic features of double account system.
- Compute the amount to be charged to Revenue A/C from the information given below:
Original cost of an asset Rs.3, 00,000. Present cost of replacement Rs.3, 90,000. Amount spent for replacement Rs.4, 70,000.
- Write a Note on “Purchase Consideration”.
SECTION – B
Answer Any Five Only. 5 x 8 = 40
- Write short note on: a) reversionary bonus; b) Actuarial valuation; c) Endowment Policy; d) Bonus utilized in reduction of premium.
- Give the “proforma” of schedule 9 of balance sheet of the bank with imaginary figures.
- Distinguish between Merger method and Purchase method of Accounting for amalgamation.
- The Trial Balance of the Neena Bank Ltd., As on 30th June 2004 shows the following balances:
Interest and discount 45,40,600
Rebate on bills discounted (1.7.2003) 4,750
Bills discounted and Purchased 3,37,400
The unexpired discount as on 30.6.04 is estimated to be Rs.5,560. Draft necessary adjusting entries and calculate the amount of interest and discount to be credited to Profit and Loss Account.
- The life assurance fund of a company on 31.3.2006 was Rs.29, 00,000. Its net liability on that date was estimated to be Rs.19, 00,000 by the company’s actuary. The investments held by the company amounted to Rs.1, 60,00,000 against which the investment reserve stood at Rs.2, 50,000. The investments have to be written down by Rs.3, 50.000.
The company declared a reversionary bonus of Rs.20 per Rs.1000 with the option to policyholders of bonus in cash at the rate of Rs.8 per Rs.1000. Total value of policies in force was Rs. 8 crores. ¼ of the policyholders in value decided to receive the bonus in cash. The company estimated that its liability for income tax would be Rs.1, 60,000.
Draft journal entries to record the above.
- City Electricity Ltd. earned a profit o fRs.8, 45,000 during the year ended 31st March 2005 after debenture interest @ 7 ½ % on Rs.2, 50,000. With the help of the figures given below, show the disposal of profits:
Original Cost of fixed Assets 1,00,00,000
Formation and other expenses 5,00,000
Monthly average of current assts (net) 25,00,000
Reserve Fund (represented by 4% Govt. Securities) 10,00,000
Contingencies Reserve Fund Investments 2,50,000
Loan from Electricity Board 15,00,000
Total depreciation written off to date 20,00,000
Tariff and Dividend Control Reserve 50,000
Security deposits received from customers 2,00,000
Assume Bank Rate to be 6%
- The Mangalore Municipal Corporation replaces part of its existing water mains with larger mains at the cost of Rs.75, 00,000. The original cost of laying the old mains was Rs.15, 00,000 and the present cost of laying those mains would be three times the original cost. Rs.1, 25,000 was realized by the sale of old materials and old materials of Rs.3, 75,000 were used in the replacement and included in the cost given above.
Give the journal entries to record the above and show the allocation of expenses between revenue and capital along with replacement account.
- Balance sheet of H.Ltd, and S.Ltd as on 31.12.2000 given below:
Liabilities HLtd. S.Ltd. Assets H.Ltd. S.Ltd.
Share Capital 10,000 5,000 sundry assets 17,000 10,000
(Rs.1 each)
General Reserve 5,000 ——— 4000 shares in
S.Ltd 5000
Creditors 3,000 3,200
P&L A/C 4,000 1,800
22,000 10,000 22,000 10,000
H.Ltd. purchased shares in S.Ltd. On 30th June, 2000. On 1st January 2000 the balance sheet of S.LTd. showed loss of Rs.3, 000 which was written off out of the profits earned during 2000.Profits are assumed to accrue evenly throughout the year. Prepare consolidated Balance sheet.
SECTION – C
Answer any two only. 2 x 20 = 40
- The following are the balance sheets of A.Ltd., and B.Ltd., as on 31-3-2005
Liabilites A.Ltd B.Ltd. Assets A.Ltd. B.LTd.
Rs. Rs. Rs. Rs.
Share Capital 10,00,000 2,50,000 Land & Building 7,50,000 1,00,000
(Rs.100 each) Investments 1,25,000 ———
P&L A/C 7,50,000 1,25,000 Current Assets 16,25,000 3,50,000
Current
Liabilities 7,50,000 75,000
25,00,000 4,50,000 25,00,000 4,50,000
A Ltd has agreed to absorb B Ltd. On the following terms: A) It is assessed that Net assets of B Ltd may be taken at RTs.3, 62,500, which is to be satisfied by issue of fully paid shares of Rs.100 each by B Ltd at par. B) A.Ltd’s investments include 20% of the shares in B Ltd. At the cost of Rs.60, 000.
Close the books of BLTd and give journal entries and Balance sheet in the books
of A.Ltd.
- From the following figures taken from the books of Money Bank Ltd., prepare profit and loss account and balance sheet as on 31.12.2004.
Debit Balances ( Rs.in ‘000) Credit Balances ( Rs.in ‘000)
Reserve fund investment 350 Share Capital 500
Money at call&short notice 450 Reserve Fund 350
Investments 250 Fixed deposits 950
Interest accrued and paid 200 Savings bank deposits 3000
Rent 20 Current deposits 8000
Salaries 69 Profit &Loss A/c1.1.2004 200
Directors fees 6 Bank draft 310
P.F contribution 5 Unclaimed dividends 20
General Expenses 10 Travelers Cheques 500
Premises 1200 Borrowed from banks 800
Cash 150 Interest and Discounts 700
Stock of stationery 10 Commission 50
Cash with RBI 1400 Branch adjustments 340
Balance with other banks 1600
Owing by foreign-
-Correspondent 100
Bills discounted 600
Loans 3000
Cash Credits and o/d 4000
Dividend 50
——— — ———
15,720 15,720
———– ———
Adjustments:
Rebate on bills discounted for unexpired term isRs.5000
A Provision for doubtful debts amounting to Rs.30, 000 is required
Create provision for taxation to the extent of Rs. 1,00,000
Charge 5% depreciation on premises on original cost.
Traveler’s Cheques paid amounted to Rs.20, 000.
- Following are the Balance Sheets of HLtd. and its subsidiary SLtd. as on31.3.05
Liabilities H. Ltd. S. Ltd. Assets H. Ltd S Ltd
Rs. Rs. Rs. Rs.
Share Capital 10, 00,000 4, 00,000 Fixed Assets 8, 00,000 5,00,000
(Rs.100 each)
General Reserve 3,20,000 1,20,000 Stock 2, 00,000 1,80,000
P&L A/C 2,80,000 1,80,000 Debtors 80,000 1,50,000
Creditors 1,60,000 1,80,000 Investments:
3200 shares in
S.Ltd at cost 6, 00,000 ——–
Bank 80,000 50,000
17,60,000 8.80,000 17,60,000 8,80,000
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H.Ltd. acquired the shares in S.Ltd on 1st Oct.2004. The Profit and loss account of S.Ltd. on 1- 4 – 2004 showed a balance of Rs.1, 40, 000 out of which a dividend of 20% was paid for the year 2003-2004 in the month of Oct 2004. H.Ltd credited the dividend to its Profit and Loss account. Sundry creditors of S.Ltd includes Rs.30, 000 for goods supplied by H.Ltd. the closing stock of S.Ltd includes goods worth Rs.12, 000 which were supplied by H.Ltd. at a profit of 25% on cost. Prepare Consolidated Balance Sheet.
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