LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034
|
B.Com. DEGREE EXAMINATION – COMMERCE
SIXTH SEMESTER – April 2009
CO 6606 – ADV. CORPORATE ACCOUNTS
Date & Time: 23/04/2009 / 9:00 – 12:00 Dept. No. Max. : 100 Marks
SECTION A (10 x 2 = 20)
Answer any TEN questions.
- Mention any two features of double account system.
- Explain Non Performing assets.
- What do you mean by Money at call and short notice?
- Explain the term Bonus in Reduction of Premium.
- What do you understand by Valuation Balance Sheet?
- On 1st October 2007, Robin Bank discounted a five month bill of Rs.20,000 at 12% p.a. Give the journal entry for rebate on bills discounted(accounts are closed on 31st December).
- Under which schedule of the Bank will the following items appear in the final statement?
- a) Unclaimed dividend; b) Interest paid on current accounts; c) Gold ; d)Non-banking assets
- 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.
- The life fund of a Life Insurance Co. on 31st March 2006 showed a balance of Rs.54,00,000. However the following items had been omitted from the accounts:
(a) Outstanding premiums-Rs.32,800
(b) Claims intimated but not admitted-Rs.17,400
(c) Claims covered under reinsurance-Rs.6500
What is the revised life insurance fund?
- While closing the books of account, a commercial bank has its advances classified as
follows:
Classification of assets Rs. in lakhs Doubtful assets: Rs. in lakhs
Standard assets 8,000 Upto one year 700
Sub-standard assets 650 One to three years 400
Loss assets 500 More than three years 200
You are required to calculate the amount of provisions to be made by the bank.
SECTION B (5 x 8 = 40)
Answer any 5 questions:
- Distinguish between Merger method and Purchase method of accounting foe Amalgamation.
- Write Short notes on:
(i) Rebate on bills discounted
(ii) Minority interest
(iii) Reinsurance
(iv) Annuity
- The following are the balance sheets of Y Ltd. and X Ltd. as on 31-3-2002
| Liabilities | Y Ltd | X Ltd | Assets | Y Ltd | X Ltd |
| Share Capital:
Shares of Rs. 10 each P & L A/c Loan from Y Ltd Creditors
|
2,00,000 30,000
—- 20,000 |
3,00,000 50,000
40,000 10,000 |
Buildings
Loan to X Ltd. Investments in 5,000 shares of X Ltd. Stock Debtors Cash at Bank |
75,000
40,000
50,000 55,000 20,000 10,000 |
2,80,000
—-
—- 70,000 35,000 15,000 |
| 2,50,000 | 4,00,000 | 2,50,000 | 4,00,000 |
X Ltd absorbs the business of Y Ltd. on the condition that is has to issue the equal
number of shares of Rs. 10 each at Rs. 11 per share held by the members of Y Ltd.
Give the ledger accounts in the books of Y Ltd. and journal
entries in the of X Ltd; and also prepare the balance sheet of X Ltd. after absorption
(apply purchase method)
- The XYZ Electricity Company decided to replace some parts of its Plant by an improved Plant.
The Plant to be replaced was built in 2003 for Rs. 54,00,000. It is estimated that it would now
cost Rs. 80,00,000 to build a new Plant of the same size and capacity. The cost of the new Plant
as per the improved design was Rs. 1,70,00,000 and in addition, material belonging to the old
Plant valued at Rs. 5,50,000 was used in the construction of the new Plant. The balance of the old
Plant was sold for Rs. 3,00,000. Compute the amount to be capitalized. Also pass the journal
entries and Replacement Account.
- The following were the balance sheets of Large Ltd. and Little Ltd. as on 31.12.2007
| Liabilities | Large Ltd | Little Ltd. | Assets | Large Ltd. | Little Ltd. |
| Share Capital:
Share Capital of Rs. 10 each General Reserve P & L A/c Creditors
|
1,00,000 40,000 30,000 20,000
________ 1,90,000 |
20,000 3,000 — 7,000
_______ 30,000 |
Buildings
Shares in Little Ltd. at cost
Stock Debtors Bank P & L A/c |
90,000
28,000
25,000 35,000 12,000 —- ________ 1,90,000 |
10,000
—
8,000 7,000 2,000 3,000
________ 30,000 |
When the Large Ltd. acquired 80% of the shares in Little Ltd. the latter had a credit balance of Profit & Loss A/c Rs. 2,000 and General Reserve Rs. 3,000. Prepare the consolidated balance sheet
- H Electricity Co. earned a Profit of Rs. 8,49,250 after paying Rs. 30,000 @ 6% as debentures
interest for the year ended 31-1-2004. The following further information is supplied for you:
Fixed Assets Rs. 1,80,00,000
Depreciation written off 50,00,000
Loan from Electricity Board 40,00,000
Reserve Fund investments at Par(4%) 10,00,000
Contingencies Reserve investment, at par(4%) 7,50,000
Tariffs and Dividends control reserve 1,00,000
Security deposits of customers 1,50,000
Customers’ contribution to assets 50,000
Preliminary expenses 40,000
Monthly average of current assets, including
Amount due from customers Rs. 2,50,000 7,60,000
Development Reserve 2,50,000
Assume RBI bank rate at 6% p.a.
Show the disposal of the profits.
- Jaldi Pay Insurance Co. Ltd. has furnished the following information for preparation of
revenue account for fire insurance business for the year ended 31.12.2007
| Rs. | Rs. | ||
| Claims admitted but not paid
Commission paid Commission on reinsurance received Share transfer fees Expenses of management Reserve for unexpired risk as on 1.1.07 Additional reserve on 1.1.07 |
42,376
50,000
12,000 5,000 78,000
2,30,000 40,000 |
Bad debts
Claims paid P&L A/c Premium received less insurance Claims outstanding as on 1.1.7 Dividend on share capital |
2,500
15,000 10,000
5,52,000
27,000
18,500 |
The following further information has also to be considered:
(i) Premium outstanding at the end of the year Rs. 40,000
(ii) Additional reserve at 10% of net premium to be maintained.
(iii) It is the policy of the company to maintain 50% of premium towards
Reserves for unexpired risks.
- A Life Insurance Company gets its valuation made once in every two years. Its Life Assurance
fund on 31.3.98 amounted to Rs. 63,84,000 before providing Rs. 64,000 for the shareholders’
dividend for the year 1997-98. It actuarial valuation due on 31.3.1998 disclosed a net liability
of R.s 60,80,000 under assurance annuity contracts. An interim bonus of Rs. 80,000 was paid
to the policy holders during the two years ending 31.3.1998.
Prepare a statement showing the amount now available as bonus to policy holders.
SECTION C (2 x 20 = 40)
Answer ANY 2 questions:
- Alpha Co. Ltd and Beta Co. Ltd decided to amalgamate their business and form a new company called Gamma Co. Ltd which will take over all the assets and liabilities of both the companies on the basis of the following balance sheets:
| Liabilities | Alpha Ltd. | Beta Ltd. | Asstes | Alpha Ltd. | Beta Ltd. |
| Share Capital:
Shares of Rs. 100 each General Reserve Profit and loss Account Creditors |
1.00,000 30,000 20,000 50,000 |
2,00,000 20,000 10,000 40,000 |
Goodwill
Machinery Patents Stock Debtors Cash |
30,000
90,000 25,000 35,000 15,000 5,000 |
20,000
1,00,000 — 80,000 60,000 10,000 |
| 2,00,000 | 2,70,000 | 2,00,000 | 2,70,000 |
(i) The purchase consideration of Alpha Ltd. is agreed at Rs.1,60,000 payable in fully
paid shares of Rs.10 each.
(ii)The purchase consideration of Beta Ltd. is agreed for an exchange of Rs.10 each fully paid in Gamma Co. Ltd for every share in Beta Co. Ltd. Prepare the Amalgamated Balance Sheet(Note: Amalgamation is in the nature of ‘Merger’)
- The following are the ledger balances extracted from the books of the Karnataka
Bank Ltd. as 31.3.2002
| Capital
40,000 shares of Rs. 10 each fully paid Statutory Reserve Profit & Loss Account(balance on 31.3.2001) Current Deposits Savings Bank Deposits Fixed Deposits Borrowing(from other banks) Employees’ Security Deposits Cash in Hand Balances with Reserve Bank of India Balances with Banks Money at Call & Short Notice Investments in Government Securities Investments in Approved Securities Investments in Shares Bills Purchased & Discounted Cash Credits, Overdrafts, etc. Buildings(cost Rs. 1,00,000) Furniture & Fixtures(cost Rs. 50,000) Inter-office Adjustments Interest Accrued on Investments Interest & Discount Income on Investments Commission, Exchange & Brokerage Profit on Sale of Investments Loss on Sale of Investments Miscellaneous Income(rent received) Interest on Deposits Interest on Borrowings Payments to & Provisions for Employees Rent, Taxes & Lighting Director’s Fees Auditors’ Fees Postage & Telegrams |
1,40,000 1,00,000 1,80,000 40,000 1,90,000 12,000 28,000 80,000 3,10,000 76,000 34,000 50,000 10,000
2,000
37,000 8,000 60,000 4,000 2,000 3,000 1,000 |
4,00,000 70,000 30,000 2,30,000 50,000 1,60,000 1,50,000 45,000
2,00,000 10,000 14,000 7,000
1,000 |
| 13,67,000 | 13,67,000 |
Other Information:
- Provide for rebate on bills discounted Rs. 5,000
- Write off depreciation on: Buildings Rs. 6,000 and Furniture & Fixtures Rs. 4,000
- Current deposits include Rs. 10,000 being debit balances representing overdrafts
- Bills for collection amounted to Rs. 70,000 and acceptances, endorsements, etc. Rs. 50,000
Prepare the Final Statements as on 31.3.2002.( Detailed schedules need not be prepared)
- The following were the balance sheets of H Ltd. and S Ltd as on 31-12-2005 from which prepare consolidated balance sheet:
| Liabilities | H Ltd | S Ltd. | Assets | H Ltd. | S Ltd. |
| Share Capital of
Rs. 10 each General Reserve P & L A/c Creditors Bills Payable
|
5,00,000 60,000 30,000 20,000 10,000
6,20,000 |
2,50,000 50,000 40,000 15,000 25,000
3,80,000 |
Fixed Assets
Shares in S Ltd. 20000shares of Rs.10eachat cost
Govt. Securities Stock Debtors Bills Receivable Bank |
2,00,000
2,50,000 — 70,000 40,000 15,000 45,000 — 6,20,000 |
1,50,000
—
80,000 75,000 35,000 15,000 25,000 3,80,000 |
(1) When the H Ltd. acquired the shares in S Ltd on 1-5-05 the latter had Rs. 50,000 and Rs10,000 to the credit of General Reserve and Profit and Loss Account respectively.
(2) Bills payable of S Ltd. include Rs. 5,000 accepted in favour of H Ltd.
(3) The debtors of H Ltd. include Rs. 2,500 due from S Ltd.
(4) The stock of S Ltd. included Rs. 12,000 supplied by H Ltd. at cost plus 20%.