LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034
B.Com. DEGREE EXAMINATION – CORPORATE SECRETARYSHIP
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FOURTH SEMESTER – April 2009
BC 4500 – CORPORATE ACCOUNTING
Date & Time: 24/04/2009 / 9:00 – 12:00 Dept. No. Max. : 100 Marks
SECTION – A
Answer all the questions (10 x 2 = 20)
- What is forfeiture of shares?
- Define internal reconstruction.
- What is Goodwill?
- Who is a liquidator?
- What is firm underwriting?
- Explain cum-interest quotation.
- State any two purposes of issuing debentures.
- What do you mean by marked applications?
- X Ltd was incorporated on 1st May 1998 acquired a business on Jan 1,1988.The
accounts were closed on Sep 30,1998. Find out time ratio.
10.State the equation to determine the number of fresh issue of shares at the time of
redemption of preference shares.
SECTION – B
Answer any five (5 x 8 = 40)
- Discuss the important provisions of Sec 80 of the Companies Act 1956,relating to issue and
redemption of Redeemable Preference shares.
12.What is break-up value of shares? State the factors to be considered in valuing the assets and
liabilities for break-up value.
- A company issued shares of Rs.10 each at 10% premium payable Rs.2 on application; Rs.3 on
allotment including premium; Rs.2 on first call and Rs.4 on final call; ‘A’ who has holding 50
shares failed to pay his allotment and first call and his shares were forfeited. ‘B’ who has holding
30 shares did not pay his first call and his shares were also forfeited. Give journal entries for
forfeiture of shares.
- A Company issued 40,000 shares of Rs.100 each for public subscription. The issue was
underwritten as follows:
P- 25% ; Q- 30%; and R- 25%
The company received a total number of 28,000 applications of which marked applications were
as follows:
P- 8,000 Shares; Q- 6,000 Shares and R- 8,000 Shares.
Determine the liability of each of the underwriters.
- A Company has, as its capital 1,00,000, ‘A’ equity shares of Re.1 each, fully paid, 1,00,000 ‘B’
equity shares of Re.1 each, 75 paise paid up and 1,00,000 ‘C’ equity share of Re.1 each,50 paise
paid up. The normal average net profit less tax, of the company is estimated to be Rs.36,000 and
the estimated rate of capitalization is 8%. Calculate the value of each class of share.
- Lee Ltd., employs a manager who is entitled to a salary of Rs.10,000 per month and in addition, to
a commission of 2% of the net profit of the company before such salary or commission. The
profit & Loss Account for the company’s financial year ending 31st March 1998 is as follows:
| Rs. | Rs. | ||
| To Staff Salaries & Bonus | 8,35,000 | By Gross Profit b/d | 30,50,000
|
| To General expenses | 3,15,000 | By Unpaid dividend | 60,000 |
| To Depreciation | 2,75,000 | By Subsidy from the State Government | 1,25,000 |
| To Income tax | 4,25,000 | By Profit on sale Machinery & Plant (difference between price realized and WDV- Cost Rs. 7,50,000 Realised Rs. 8,00,000) | 2,00,000 |
| To Manager’s salary | 1,20,000 | ||
| To Commission to the manager (on account ) | 25,000 | ||
| To Ex-gratia payment to an employee | 20,000 | ||
| To Charitable Donations | 50,000 | ||
| To Balance c/d | 13,70,000 | ||
| 34,35,000 | 34,35,000
|
Depreciation includes Rs.75,000 development rebate on new machinery installed during the year. Calculate the commission payable to the manager.
17.State the conditions to be satisfied for amalgamation in the nature of merger.
18.The following is the balance sheet of unibex Ltd as on 31st Dec 1991.
| Liabilities | Rs. | Assets | Rs. |
| Paid up capital 7,000 equity shares of Rs.100 each | 7,00,000 | Goodwill | 1,40,000 |
| 10% Debentures | 4,00,000 | Land & Building | 4,00,000 |
| Creditors | 2,00,000 | Plant & Machinery | 4,40,000 |
| Bank overdraft | 2,50,000 | Stock | 1,30,000 |
| Bills payable | 50,000 | Debtors | 80,000 |
| Bills receivable | 1,70,000 | ||
| Preliminary expenses | 40,000 | ||
| Profit & Loss a/c | 2,00,000 | ||
| 16,00,000 | 16,00,000 |
The directors decided to reduce the equity share capital to Rs.2,80,000 and all the fictitious and intangible assets were to be wiped off. It was decided to write down plant & machinery by Rs.40,000. Give journal entries to record the effect of the above scheme of reductions of share capital and prepare the balance sheet after the reconstruction has been carried out.
SECTION – C
Answer any TWO (2 x 20 = 40)
- The balance sheet of ABC Ltd on 31.12.1990 stood as follows:
| Liabilities | Rs. | Assets | Rs. |
| Equity Shares of Rs.100 each | 5,00,000 | Fixed Assets | 8,00,000 |
| 9% redeemable preference shares of Rs.100 each | 3,00,000 | Investments | 1,00,000 |
| Securities Premium | 50,000 | Bank Balance | 2,00,000 |
| Capital reserves | 1,00,000 | Other Current assets | 5,00,000 |
| P&L A/C | 2,00,000 | ||
| 10% Debentures | 3,00,000 | ||
| Creditors | 1,50,000 | ||
| 16,00,000 | 16,00,000 |
Both the redeemable preference shares and debentures were due for redemption on 1.1.91. The company arranged for the following:
- It issued 2,000 equity shares of Rs.100 at a premium of 10%
- It sold the investment for Rs.90,000
- It arranged a bank overdraft to the extent necessary.
The redemptions were carried out. Give entries for redemption of preference shares and
debentures and balance sheet after redemption.
- Moon and Star Ltd. Is a company with an authorized capital of Rs.5,00,000 divided in to 5,000
equity shares of Rs.100 each on 31.12.2003. of which 2,500 shares were fully called up. The
following are the balances extracted from the ledger as on 31.12.2003.
Trial balance of Moon & Star Ltd.
| Debit | Rs. | Credit | |
| Opening stock | 50,000 | Sales | 3,25,000 |
| Purchases | 2,00,000 | Discount received | 3,150 |
| Wages | 70,000 | Profit & Loss A/c | 6,220 |
| Discount allowed | 4,200 | Creditors | 35,200 |
| Insurance (up to 31.3.04) | 6,720 | Reserves | 25,000 |
| Salaries | 18,500 | Loan from managing director | 15,700 |
| Rent | 6,000 | Share capital | 2,50,000 |
| General expenses | 8,950 | ||
| Printing | 2,400 | ||
| Advertisements | 3,800 | ||
| Bonus | 10,500 | ||
| Debtors | 38,700 | ||
| Plant | 1,80,500 | ||
| Furniture | 17,100 | ||
| Bank | 34,700 | ||
| Bad debts | 3,200 | ||
| Calls-in-arrears | 5,000 | ||
| 6,60,270 | 6,60270 |
You are required to prepare profit & Loss Account for the year ended 31.12.2003 and a balance sheet as on that date. The following further information is given:
- Closing stock was valued at Rs.1,91,500
- Depreciation on plant at 15% and on furniture at 10% should be provided.
- A tax provision of Rs.8,000 is considered necessary.
- The directors declared an interim dividend on 15.8.03 for 6 months ending june 30, 2003 at 6%.
- Madhur Ltd went in to voluntary liquidation on 31.12.1983. Madhur Ltd’s Balance Sheet as on
31.12.1989 was as follows:
| Liabilities | Rs. | Assets | Rs. |
| 5,000 equity shares of Rs.100 each, Rs.75 per share paid up | 3,75,000 | Land & Building | 1,50,000 |
| 5,000 equity shares of Rs.100 each,Rs 50 per share paid up | 2,50,000 | Plant & Machinery | 5,50,000 |
| 2,000, 10% preference shares of Rs.100 each | 2,00,000 | Patents | 70,000 |
| 5% debentures | 3,00,000 | Debtors | 2,35,000 |
| Interest outstanding on debentures | 15,000 | Cash at bank | 30,000 |
| Creditors | 2,60,000 | Profit & Loss A/c | 2,35,000 |
| Stock | 1,30,000 | ||
| 14,00,000 | 14,00,000 |
Dividends on preference shared are in arrears for two years. The arrears of preference dividend payable on liquidation as per the articles of the company.
Creditors include preferential creditors Rs.15,000 and a mortgage loan for Rs.1,20,000 secured by a mortgage on Land & Buildings.
The assets realized as under:
Land &Buildings Rs.2,30,000; Plant & Machinery Rs.4,50,000; patents Rs.45,000; Debtors Rs.2,00,000 and stock Rs.1,15,000.
The expenses of liquidation amounted to Rs 13,500. The liquidator is entitled to remuneration of 3% on all assets realized (except cash at bank) and 2% on amount distributed to unsecured creditors (except preferential creditors).
All payments were made on 30th june 1984.
Prepare the liquidator’s final statement of account.
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