LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034

B.Com. DEGREE EXAMINATION – COMMERCE

KP 16

FOURTH SEMESTER – April 2009

CO 4500 – CORPORATE ACCOUNTING

 

 

 

Date & Time: 24/4/2009 / 9:00 – 12:00       Dept. No.                                                       Max. : 100 Marks

 

 

PART  A

 

Answer ALL questions                                                                                                   Marks: 10×2=20

Explain the following:

1. Calls in arrears
2. Capital redemption reserve
3. Super profit
4. Contingent liability
5. Profit prior to incorporation
6. Underwriting
7. Liquidator’s remuneration
8. Bonus shares
9. Internal reconstruction.
10. Profit and Loss appropriation account

 

PART  B

Answer ANY FIVE questions                                                                                       Marks: 5 x 8 =40

 

11. State the provision of the Company’s Act for issuing shares at a discount.
12. What are conditions to be satisfied for amalgamation to be treated as a “merger”.
13. A Ltd. Issued 20000 Equity shares of Rs.10 each, which were under written by X, Y and Z as

follows.

X– 10,000 shares;  Y – 6,000 shares;  Z – 4,000 shares.

In addition there was  firm underwriting:

X –2,000 shares;  Y – 1900 shares;  Z – 3000 shares.

Total subscription including firm underwriting was 17000 shares and the forms included the following marked forms:

X – 3,480 shares;  Y– 2,000 shares;  Z – 2,520 shares.

Show the allocation of liability of the underwriters assuming that shares underwritten firm are treated as unmarked.

14. A Ltd., was incorporated on 1.4.2008 to take over the running business of V Ltd., as from 1.1.2008. The following is the summarized profit and loss account for the year ended 30.12.2008

Rs.                                                          Rs.

Cost of sales                                                                1,80,000               Gross profit        3,00,000

Administrative expenses                                       30,000

Selling commission                                                   9,000

Goodwill written off                                               4,000

Interest paid to vendors                                       12000

(loan repaid on 1.7.08)

Debenture interest                                                 8,000

Depreciation                                                              6,000

Directors’ fees                                                          3,000

Net                Profit                                                     48,000                                               ———–

3,00,000                                               3,00,000

 

Sales after incorporation was double that before incorporation.

Calculate profit before and after incorporation.

 

15. A Ltd issued 1000 6% debentures of Rs.100 each on 1/1/2007. Interest is payable on 30^th June and 31^st December.

On 1/4/2008 the Company redeemed 200 debentures at Rs.98 ex-interest and on 1/11/2008 another 100 debentures at Rs.99 cum interest.

Pass the relevant entries for the years 2007 and 2008.

 

16a. A Ltd earned an average profit of Rs.30,000 after tax. 20% of the profit was to be transferred to reserve. The capital of A Ltd consisted of 10000 equity shares of Rs.10 each and Rs.50000 12% preference shares of Rs.10 each. The normal rate of return is 10%.

Calculate the value of the equity share on yield basis.

 

16b. A Ltd earned the following profits after tax:

Year                       Profit

1998                       Rs.20000

1999                       Rs.40000

2000                       Rs.45000

The capital employed by the company was Rs.2,50,000. Normal rate of return was 10%.

Calculate the Goodwill based on 2 years purchase of super profit.

 

17. A Ltd has 10000 8% redeemable Preference shares of Rs,10 each. The company decided to redeemthe Preference shares at 10% premium, for which purpose,
18. a) it issued 6000 Equity shares of Rs.10 each at par
19. b) sold investments costing Rs.20000 for Rs.25000
20. c) issued Rs.10000 12% debentures

Assuming that the Company has sufficient accumulated profits, pass necessary journal

entries.

 

18. The following particulars relate to a limited company, which went into voluntary

liquidation:

Preferential creditors           Rs.25000

Unsecured creditors             Rs.58000

6% debentures                       Rs.30000

The assets realized Rs.80000

The expenses of liquidation amounted to Rs.1500 and the Liquidator’s remuneration was agreed at 3% on amounts realized and 2% on amounts paid to unsecured creditors including preferential creditors.

Show the liquidator’s final statement of account.

 

 

PART  C

 

Answer ANY TWO questions                                                                            Marks: 2×20=40

 

• The following is the Trial Balance on ABC Ltd for the year ending 31/3/2006:

Debit balances	Rs.	Credit balances	Rs.
Land Machinery Debtors Cash Bank Preliminary expenses Stock (1/4/2005) Purchases Salaries Office expenses 10% Govt. bonds	1,50,000 1,00,000 60,000 20,000 40,000 12,000 20,000 90,000 20,000 8,000 60,000 5,80,000	Equity share capital 8% Preference share capital 12% Debentures Interest on Govt. bonds Sales Creditors Unclaimed dividends P & L A/c  (1/4/05)	2,00,000 1,00,000 50,000 6,000 2,00,000 8,000 4,000 12,000     ———— 5,80,000

Other information:

1. Provide Depreciation at 10% per annum on machinery.
2. Write off Rs.2,000 Preliminary expenses.
3. Transfer Rs.20,000 to General Reserve.
4. Provide Rs.25,000 for income tax.
5. Directors propose 10% Dividend on Equity shares.
6. Stock on 31/3/06 Rs.30,000
7. Provide interest on Debentures for the full year.

 

Prepare Trading & Profit & Loss A/c for the year ending 31/3/2006 and a Balance sheet on that date.

 

20. Balance sheet of Y Ltd on 31^st March 2008 was as follows:

	(Rs.)		Rs.)
Equity capital (Rs.10) Preference capital (Rs.10) Reserves 9% ebentures(Rs.100) Creditors Statutory reserve	3,00,000 1,00,000 1,00,000 50,000 70,000   70,000 6,90,000	Fixed Assets Loan to Y Ltd Current Assets	4,00,000 – 2,90,000 – –   6,90,000

X Ltd agrees to  take over Y Ltd. on the following terms:

1. X Ltd. will issue one equity share of Rs.10 each (at premium of Rs.4) and Rs.8 in cash for every two equity shares in Y Ltd.
2. Preference shares of Y Ltd are to be paid in cash at a premium of 10%.
3. Debenture holders of Y Ltd are to be discharged at a premium of 5% by the issue of 8% debentures in X Ltd.
4. Expenses of realization Rs.5,000 is to be paid by X Ltd.

Show Realization account, X Ltd account, Preference shareholders A/c and Equity shareholders A/c in the books of Y Ltd.

Pass entries  in the books of  X Ltd for the takeover.

 

21a. The share capital of ABC Ltd., consisted of the following:

5,000 6% Preference shares of Rs.100 each and 25,000 equity shares of Rs.10 each.

The company had accumulated losses totaling Rs.1,75,000 and Goodwill to the extent of Rs.10,000. It is ascertained that Fixed Assets are overvalued by Rs.1,50,000 and current assets by Rs.50,000. The following scheme was adopted to write off the losses and reduce the assets:

1. Each 6% preference shares of Rs.100 each is to be converted into one 7% preference shares of Rs.60 each.
2. Equity shares to be reduced to Rs.2 each

• The Directors to refund Rs.10,000 fees received by them.

1. Preference dividend which is in arrears for 3 years, is to be settled by the issue of 5,000 equity shares of Rs.2 each.

Journalize.

 

21b. A Ltd. issued 10000 equity shares of Rs.10 each at a discount of 10%, payable Rs.4 on application, Rs.3 on allotment and Rs.2 on first and final call. Applications were received for 9000 shares and all were accepted. A holder of 200 shares failed to pay the allotment and the call money. His shares were forfeited and later re-issued at Rs.8 fully paid.

Journalize.

 

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