LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034
B.Com. DEGREE EXAMINATION – COMMERCE
SIXTH SEMESTER – APRIL 2011
CO 6606 – ADV. CORPORATE ACCOUNTS
Date : 09-04-2011 Dept. No. Max. : 100 Marks
Time : 9:00 – 12:00
PART – A
ANSWER ALL THE QUESTIONS: (10 X 2=20)
- Explain the meaning of double insurance.
- Explain what is non- performing assets?
- Write a short note on minority interest.
- Write a note on purchase consideration.
- What is meant by double account system?
- A life assurance co. prepared its revenue account for the year ended 31.12.2007 and ascertained its life assurance fund to be 28,35,000. It was found later that the following has been omitted from the accounts.
- Interest accrued on investments Rs.39000; income tax liable to be deducted thereon is estimated to be Rs.10500.
- Outstanding premiums Rs.32800.
- Bonus utilized for reducation of premium Rs. 6750
- Claims intimated but not admitted Rs. 17400.
- Claims covered under reinsurance Rs. 6500.
What is the true life assurance fund?
- On 31st march 2008 bharat commercial bank ltd. Finds its advances classified as follows:
Rs.
Standard assets 1491300
Substandard assets 92800
Doubtful assets(secured):
Doubtful for one year 25660
Doubtful for one year to three years 15640
Doubtful for more than three years 6580
Loss assets 10350
Calculate the amount of provisions to be made by the bank against the above mentioned advances.
- Raman ltd. Agrees to purchase the business of Krishnan ltd. On the following terms.
- For each of the 10000 shares of Rs.10 each in Krishnan ltd, two shares of raman ltd. Of Rs.10 each will be issued at an agreed value of Rs.12 per share. In addition Rs.4 per share in cash also will be paid.
- 8% debentures worth 80000 will be issued to settle the Rs.60000 9% debentures in Krishnan ltd.
- 10000 will be paid towards expense of winding up.
Calculate the purchase consideration.
- The trial balance of the ABC bank ltd. As on 30.6.2004 shows the following balances.
Interest and discount 45,40,600
Rebate on bill discounted (1.7.2003) 4750
Bills discounted and purchased 3,37,400
The unexpired discount as on 30.06.2004 is estimated to be 5560. Draft necessary adjusting entries and calculate the amount of interest and discount to be credited to profit and loss account.
- Explain cost of control.
PART – B
ANSWER ANY FIVE QUESTIONS: (5 X 8=40)
- Distinguish between amalgamation, absorption and external reconstruction with suitable examples.
- Explain the various schedules to be prepared by a commercial bank.
- What are the advantages and disadvantages of double account system?
- From the following particulars prepare a profit and loss account of new bank ltd. For the year ended 31.12.2006.
Particulars Rs.(000’s) Particulars Rs.(000’s)
Interest of loans 260 interest on cash credits 225
Interest on fixed Deposits 280 Rent and taxes 20
Debit on bills discounted 50 interest on over drafts 56
Commission charged to customers 9 directors and auditors fees 4
Establishment expenses 56 interest on savings account 70
Discount on bill discounted 200 postage and telegram 2
Interest on current account 45 sundry charges 2
Printing and advertisement 3
- The balance sheets of C ltd and D ltd as at 31.12.2006 were as follows:
LIABILITIES | C LTD.(Rs) | D LTD.(Rs) | ASSETS | C LTD.(Rs) | D LTD.(Rs) |
Sh. Capital (in shares of Rs.10 each) | 200000 | 100000 | Sundry assets | 132500 | 138200 |
General reserve | 18000 | 20000 | Good will | ——— | 20000 |
Profit and loss a/c | 24500 | 23000 | Shares in D ltd at cost | 140000 | ——- |
creditors | 30000 | 15200 | |||
272500 | 158200 | 272500 | 158200 |
In the case of D ltd. Profit for the year ended 31.12.2006 is Rs 12000 and transfer to reserve is Rs. 5000. The holding of C ltd. In D ltd. Is 90% acquired on 30th June 2006. Draft a consolidated balance sheet of C ltd and its subsidiary.
- From the following balance sheet of Sam ltd. As on 31.3.2004
LIABILITIES | Rs | ASSETS | Rs. |
Sh. Capital:
8% pref sh. Of Rs100 each. |
375000 | Fixed assets | 1625000 |
Equity shares of Rs.10 each | 750000 | Investments | 300000 |
General reserve | 450000 | Current assets | 250000 |
7% debentures | 350000 | ||
Current liabilities | 250000 | ||
2175000 | 2175000 |
- ltd agreed to take over the business of Sam ltd.
Calculate the purchase consideration under net assets method on the basis of the following:
- R ltd agreed to discharge 7% debentures at a premium of 10% by issuing 9% debentures of R ltd.
- Fixed assets are to be valued at 10% above book value, the investments at par, current assets at 10% discount and current liabilities at book value.
- From the following particulars relating to Z insurance co. ltd. Prepare fire revenue account for the year ending 31.12.2004.
Rs. Rs.
Claims paid 480000 premium received 1200000
Claims outstanding on 1.1.04 40000 reinsurance prem.pd. 120000
Claims intimated but not accepted
And paid on 31.12.2004 10000 commission 200000
Claims intimated and accepted
but not paid on 31.12.2004 60000 commission on
reinsurance ceded 10000
commission on reinsurance accepted 5000 provision for
unexpired risk on
1.1.04 400000
Expenses of management 305000
Bonus in reduction of premium 12000 additional provision
For unexpired risk on
1.1.04 20000
You are required to provide for additional reserve for unexpired risk at 1% of net premium in addition to the opening balance.
- A life insurance co. gets its valuation made once in every two years. Its life assurance fund on 31.3.08 amounted to 63,84,000 before providing Rs.64000 for the shareholders dividend for the year 2007 – 2008. Its actuarial valuation due on 31.3.08 disclosed a net liability of Rs.6080000 under assurance annuity contracts. An interim bonus of Rs 80000 was paid to the policy holders during the two years ending 31.03.08. prepare a statement showing the amount now available as bonus to policy holders.
PART – C
ANSWER ANY TWO QUESTIONS: (20 X 2=40)
- From the following balances of united general insurance company ltd. As on 31.12.08 prepare a) fire revenue account; b) marine revenue account and c) profit and loss account.
Provision for unexpired risk
On 1.1.08 – fire Marine |
500000 1640000 |
Interest, dividend received | 28000 |
Additional reserve on 1.1.08
Fire |
100000 |
Difference in exchange(cr) | 600 |
Bad debts – fire
marine |
10000
24000 |
Miscellaneous receipts | 10000 |
Auditors fees | 2400 | Profit on sale of land | 120000 |
Directors fees | 10000 | Premium received – fire
Marine |
1200000
2160000 |
Share transfer fees | 1600 | Expenses of management – fire
Marine |
290000
800000 |
Bad debts recovered | 2400 | Commission earned on reinsurance
Ceded – fire Marine |
60000 120000 |
Claims paid and outstanding
Fire Marine |
380000 760000 |
||
Commission paid – fire
Marine |
180000
216000 |
||
depreciation | 70000 | ||
Provision for unexpired risk is to be kept at 50% of the premiums received for fire and at 100% for marine departments. The additional reserve in case of fire insurance is to be increased by 5% of the net premiums.
- The following balance sheets are presented to you:
Balance sheet as on 31.12.2009
LIABILITIES | A.Ltd.
Rs. |
B.Ltd.
Rs. |
ASSETS | A.Ltd.
Rs. |
B.Ltd.
Rs. |
Sh. Capital:
Shares of Rs.50 each |
250000 | 100000 | Fixed Assets | 175000 | 75000 |
General reserve | 50000 | ——– | Stock in trade | 45000 | 20000 |
Profit and loss account | 40000 | ——– | Debtors | 30000 | 15000 |
6% debentures | ——- | 50000 | 6% debentures in B ltd
Acquired at par |
30000 | ——- |
Trade creditors | 37500 | 22500 | Shares in B ltd 1500 @ Rs 40 | 60000 | ——- |
Cash at Bank | 37500 | 12500 | |||
Profit and Loss account | ——– | 50000 | |||
377500 | 172500 | 377500 | 172500 |
A ltd. acquired the shares on 1.4.09. The profit and loss account of B ltd showed a debit balance of Rs.75000 on 1.1.09. Trade creditors of B ltd include Rs.10000 for goods supplied by A ltd on which A ltd made a profit of Rs 1000. Half of the goods were still in stock on 31.12.09. Prepare the consolidated balance sheet.
- From the following particulars of XYZ bank ltd having its own premises, prepare the balance sheet in the prescribed form as on 31.12.2010.
particulars | Rs.in 000’s | particulars | Rs.in 000’s |
Authorized capital | 4000 | Letters of credit issued | 500 |
Subscribed capital 4 lakh shares of Rs.10 each Rs.5 paid | 2000 | Telegraphic transfers payable | 800 |
investments | 7000 | Bank drafts payable | 1200 |
Bills discounted (in India) | 15000 | Short loans | 40 |
Profit and loss(cr) | 850 | Rebate on bills discounted | 10 |
Endorsement on bills for collection | 100 | Acceptances for customers | 5000 |
Liability of customers for acceptances | 5000 | Loans and advances | 10000 |
Money at call on short notice | 9000 | Cash credits | 10000 |
Cash in hand | 2000 | overdrafts | 1000 |
Cash with RBI | 4000 | Bills purchased(payable ouside india) | 1000 |
Reserve | 3000 | Current and deposit accounts | 56000 |
Cash with SBI | 4000 | Investment fluctuation fund | 100 |
Bills for collection | 100 |