LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034
B.Com. DEGREE EXAMINATION – CORPORATE SEC.
FOURTH SEMESTER – APRIL 2011
BC 4502/BC 4500 – COMPANY ACCOUNTS
Date : 08-04-2011 Dept. No. Max. : 100 Marks
Time : 1:00 – 4:00
SECTION – A
Answer ALL questions : (10 x 2 = 20 marks )
- What is partial underwriting of shares ?
- Name any four preferential creditors.
- Write a note on Capital Redemption Reserve ?
- What do you understand by the term ‘Forfeiture of shares’ ?
- Distinguish between ‘Ex-Interest’ and ‘Cum-Interest’ ?
- Calculate the goodwill at one year’s purchase of the last three year’s average profit. The profit for the 1st year was Rs.6,000, 2nd year Rs.12,000 and the 3rd year Rs.18,000.
- Raj Ltd. issued 40,000 equity shares of Rs.10 each payable as Rs.5 on application and Rs.5 on allotment. Applications were received for 50,000 shares and the allotment was made on pro-rata basis. Krishna to whom 400 shares were allotted, failed to pay the allotment money and his shares were forfeited. Calculate the net amount received on allotment for the remaining shares.
- X Ltd. decides to redeem 650, 15% redeemable preference shares of Rs.100 each at premium of 10%. It has a general reserve of Rs.70,000 and Securities premium of Rs.4,000. Calculate the amount required to be transferred to Capital Redemption Reserve a/c in the following cases :-
(a) If it is decided to issue 1,950 Equity shares of Rs.10 each at 30% premium for the
purpose of redemption of Preference shares.
(b) If it is decided to issue 3,125 Equity shares of Rs.10 each at 20% discount for the
purpose of redemption of Preference shares.
- The liquidator of a company is entitled to a remuneration of 2% on assets realized and 3% on the amount distributed to unsecured creditors. The assets realized Rs.1,00,000 including cash balance of Rs.5,000. Amount available for distribution to unsecured creditors before paying liquidators remuneration was Rs.43,100. Calculate liquidator’s remuneration.
- 75% of an issue of 3,00,000 shares of Rs.10 each is underwritten by R & Co. Applications totaled 2,00,000 shares. Determine the liability of the underwriters ?
SECTION – B
Answer any FIVE questions : ( 5 x 8 = 40 marks)
- State the provisions of the Companies Act regarding the calculation of net profits available for managerial remuneration.
- State the legal requirements for alteration of share capital.
- G Ltd. issued 2,000, 12% debentures of Rs.100 each on 1.1.2005 at a discount of 10%, redeemable at premium of 15% in equal annual drawings in 4 years out of profits. Give journal entries both at the time of issue and redemption of debentures.
- Determine the maximum remuneration payable to the part time directors and manager under
Section 309 and 387 from the following particulars:
Before charging any such remuneration the Profit & Loss account showed a credit balance of Rs.23,05,000 for the year ended 31.03.2008 after taking into account the following particulars: Rs.
Profit on sale of investments 2,05,000
Subsidy received from government 4,10,000
Loss on sale of fixed assets 65,000
Ex-gratia to an employee 30,000
Compensation paid to an injured workman 75,000
Provision for taxation 2,79,000
Bonus to foreign technicians 3,12,000
Multiple shift allowance 1,00,000
Special depreciation 75,000
Capital expenditure 5,10,000
- AB Ltd. issued 1,50,000 equity shares. The whole of the issue was underwritten as follows:
X – 50%; Y – 25% and Z – 25%. Applications for 1,20,000 shares were received in all, out of which applications for 30,000 shares under stamp of X, those for 15,000 shares that of Y and those for 30,000 shares that of Z. The remaining shares did not bear any stamp. Determine the liability of the underwriters.
- The balance sheet of Wallace Ltd. as on 31.12.2007 was a under:
Rs. Rs.
Redeemable preference shares Sundry assets 3,65,000
of Rs.100 each 1,00,000 Bank 1,40,000
Equity shares of Rs.100 each 2,00,000
General reserve 80,000
P & L a/c 50,000
Creditors 75,000
———– ————
5,05,000 5,05,000
On this date the preference shares were redeemed at par. Journalize and prepare balance sheet after redemption.
- A company went into voluntary liquidation on 31.03.2008, when the following balance sheet was prepared.
Liabilities Assets
Rs. Rs.
3,000 shares of Rs.10 each 30,000 Goodwill 6,960
Unsecured creditors 15,532 Freehold property 5,000
Partly secured creditors 5,836 Machinery 7,480
Preferential creditors 810 Stock 11,710
Bank O/D 332 Debtors 9,244
Cash 100
P & L a/c 11,816
——– ———-
52,310 52,310
The liquidator realized the assets as follows:
Freehold property Rs.3,600; Machinery Rs.5,000; Stock Rs.6,200; Debtors Rs.8,700.
The expenses of liquidation amounted to Rs.100 and the liquidator’s remuneration was agreed at 2.5% on the amount realized including cash and 2% on the amount paid to unsecured creditors. Prepare the liquidator’s final statement of account.
- Following are the Balance sheets of two companies as on 31.3.2006
Liabilities XLtd. Y Ltd.
Share capital ( shares of Rs.10 each ) 25,000 40,000
Capital reserves 5,000 ___
General reserves 18,000 50,000
Loans 11,000 20,000
Creditors 21,000 23,000
Provision for tax 5,500 26,000
Proposed dividend ___ 5,000
____________________
85,500 1,64,000
___________________
Assets
Fixed assets 41,500 80,000
Investments 8,500 _
Current assets 34,500 84,000
Goodwill 1,000 –
____________________
85,500 1,64,000
___________________
Additional information :
- X Ltd is absorbed by Y Ltd
- Goodwill of X Ltd is worthless
- Fixed assets of X Ltd are valued at Rs.39,500
- Shareholders of X Ltd are given shares of Y Ltd on the basis of the intrinsic value of these two companies.
Calculate the intrinsic value of shares of both companies.
SECTION – C
Answer any TWO questions : ( 2 x 20 = 40 marks)
- Unstable Ltd. went into compulsory liquidation . Their summarized Balance Sheet as at 31st March 2009 appears as under:
Liabilities Rs. Assets Rs.
2,50,000 Equity shares of Rs.10 each 25,00,000 Land and Buildings 5,00,000
Secured Debentures
(secured on Land & Building) 10,00,000 Other Fixed Assets 20,00,000
Unsecured Loans 20,00,000 Current Assets 45,00,000
Trade Creditors 35,00,000 Profit & Loss a/c 20,00,000
90,00,000 90,00,000 Contingent liabilities are : Rs.
for Bills Discounted 1,00,000
for Excise duty demands 1,50,000
On investigation, it is found that the contingent liabilities are certain to devolve and that the assets are likely to be realized as follows : Rs.
Land and Buildings 11,00,000
Other Fixed Assets 18,00,000
Current Assets 35,00,000
Prepare the Statement of Affairs and Deficiency A/c.
- The following is the Balance sheet of United Industries Ltd on 31.3.2008
Liabilities Rs. Assets Rs.
Share capital:
6,000 6% preference shares 6,00,000 Goodwill 45,000
Of Rs.100
12,000 equityshares of Rs.100 12,00,000 Land &Building 6,00,000
8% Debentures 3,00,000 Plant 9,00,000
Bank overdraft 3,00,000 Stock 1,30,000
Sundry creditors 1,50,000 Debtors 1,40,000
Cash 15,000
Profit&loss account 7,00,000
Preliminary expenses 20,000
25,50,000 25,50,000
On the above date, the company adopted the following scheme of reconstruction
- The equity shares are to be reduced to shares of Rs.40 each fully paid and the preference share to be reduced to fully paid shares of Rs.75 each.
- The debenture holders took over stock and debtors in full satisfaction of their claim.
- The land and buildings to be appreciated by 30% and plant and machinery to be depreciated by 30%.
- The fictitious and intangible assets are to be eliminated.
- Expenses of reconstruction amounted to Rs.5,000.
Give journal entries incorporating the above scheme of reconstruction and prepare the reconstructed Balance sheet.
- From the following Balance sheets prepare a Cash Flow Statement. 2008 2009 2008 2009
Rs. Rs. Rs. Rs.
Capital 1,80,000 1,80,000 Cash 40,000 50,000
P & L a/c 23,000 16,000 Debtors 73,000 77,000
Reserve 50,000 60,000 Investments 84,000 1,10,000
Debentures 1,14,000 1,30,000 Prepaid expenses 2,000 1,000
Prov. for tax 22,000 13,000 Stock 1,06,000 92,000
Creditors 96,000 1,03,000 Machinery 1,79,000 1,71,400
Goodwill 1,000 600
————- ———– ———– ————
4,85,000 5,02,000 4,85,000 5,02,000
————- ———– ———– ————
Additional information:
- New machinery for Rs. 15,000 was purchased but old machinery costing Rs. 6,000 was sold for Rs.2,000 on which accumulated depreciation was Rs. 3,000.
- Interim dividend paid 10,000.
- Tax paid during the year Rs.25,000.
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