LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034

B.Com. DEGREE EXAMINATION – CORPORATE SECRETARYSHIP

GF 9

FOURTH SEMESTER – APRIL 2008

BC 4502 – COMPANY ACCOUNTS

Date : 26-04-08 Dept. No. Max. : 100 Marks

Time : 9:00 – 12:00

Part A (Answer all the questions) (10 x 2 = 20)

What is minimum subscription?
What is meant by underwriting?
Write a note on capital redemption reserve.
How do you apportion the following expenses while ascertaining profits prior to incorporation: Depreciation, advertisement, director’s fee, preliminary expenses.
Briefly explain consolidation and subdivision of shares with an example.
What is interim dividend?
A company forfeits 100 shares of Rs 10 each, issued at Rs 11 per share. The premium was payable on allotment. The shareholder failed to pay the allotment money of Rs.3 per share and second and final call of Rs 5 per share. Pass the journal entry.
A company issued 1000 8% debentures of Rs 100 each at a discount of 5%, redeemable at a premium of 10%. Pass journal entry.
How is provision for tax treated in the final accounts of a company?
The following extract from the balance sheet of G and Company Limited as on 31^st December 1997 is given to you Rs.

Share capital:

200000 equity shares of Rs.10 each 20,00,000

300000 6% redeemable preference shares of Rs 10 each 30,00,000

Capital reserve 15,00,000

General reserve 9,00,000

Profit and Loss account 25,50,000

The company exercises its option to redeem the preference shares on 1.1.98. The company has sufficient cash. Give journal entries to record the redemption.

Part B (answer any five questions only) 5 x 8 = 40

On 1.1.92 a company issued Rs 20,00,000 7% debentures at 5 % discount repayable in five years at par. The company reserved the right to redeem to the extent of Rs 2,00,000 in any year by purchase in the open market. The interest was payable half-yearly on 30^th June and 31^st December and the same was duly paid.

On 31^st December 1992, the company purchased Rs 200000 debentures at a cost of Rs. 1,91,000. Pass necessary journal entries in the books of the company up to 31^st December 1992 including closing entries on that date if the above redemption was out of profit.

F ltd issued 60000 shares which were underwritten as follows.

X – 30000 shares, Y – 18000 shares, Z – 12000 shares.

In addition there was firm underwriting as follows.

X – 3000 shares Y – 1500 shares Z – 4500 shares.

The total subscription including firm underwriting were 45600 shares. The following marked form were included in the subscription

X – 9000 shares Y – 13500 shares Z – 5100 shares.

Show the allocation of liabilities of each underwriter if the benefit of firm underwriting is given to individual underwriters by treating them like marked forms.

Distinguish between debentures and shares.
What is capital reduction? What are the provisions of the companies act with regard to reduction of share capital?
Explain the provisions relating to redemption of preference shares.
The following particulars are available in respect of the business carried on by Mitra.

Capital invested 50000
Trading results

1994 profit 12200

1995 profit 15000

1996 loss 2000

1997 profit 21000

Market rate of interest on investment 8%
Rate of risk return on capital invested in business 2%
Remuneration from alternative employment of the proprietor( if not engaged in business) 3600 per annum

Compute the value of good will of the business on the basis of 3 years purchase of super profits taking average of last four years.

S limited was incorporated on 1.7.98 and received its certificate of commencement of business on 1.8.98. the company bought the business of m/s p and co. with effect from 1.3.98. from the following figures relating to the year ending 31^st March 99, find out the profits before and after incorporation.

Sales for the year were Rs. 6,00,000 out of which sales upto 1.7.98 were 250000
Gross profit for the year was Rs 1,80,000
The expenses debited to profit and loss account were:

particulars	Rs	Particulars	Rs
Rent	9,000	General expenses	4,800
Salary	15,000	Advertising	18,000
Directors fees	4,800	Stationery	3,600
Interest on debentures	5,000	Commission on sales	6,000
Audit fees	1,500	Bad debts(Rs 500 relate to debts prior to incorporation)	1,500
Discount on sales	3,600	Interest to vendor on purchase consideration up to 1.9.98	3,000
depreciation	24,000

The following particulars relate to a company which went into voluntary liquidation.

Preferential creditors Rs 25000, unsecured creditors Rs.58,000, 6% debentures Rs.30,000.

The assets realized Rs 80,000. The expense of the liquidation were Rs 1500 and the liquidators remuneration was agreed at 2.5% on the amount realized and 2% on the amount paid to unsecured creditors including preferential creditors. Show the liquidators final statement of accounts.

Part C (answer any two questions only) 2 x 20 = 40

A Limited issued a prospectus inviting applications for 200000 shares of Rs 10 each at a premium of Rs 5 per share payable on application Rs 2.50 per share, allotment Rs 7.50, (including premium) on first call Rs 4, and on final call Re 1 per share. Applications were received for 300000 shares and allotment was made on pro-rata to the applicants of 240000 shares, and the remaining applications being refused. David to whom 4000 shares were allotted failed to pay the allotment money and on his failure to pay the first call his shares were forfeited. Madan the holder of 6000 shares failed to pay the two calls and his shares were forfeited all these shares were sold to Robert at Rs 8 per share fully paid. Pass journal entries.
From the following balance sheets of X Limited prepare cash flow statement.

Liabilities	31.03.06	31.03.07	Assets	31.03.06	31.03.07
Equity share capital	3,00,000	4,00,000	Goodwill	1,15,000	90,000
Preference share capital	1,50,000	1,00,000	Land and building	2,00,000	1,70,000
General reserve	40,000	70,000	Plant	80,000	2,00,000
Profit and loss account	30,000	48,000	Debtors	1,60,000	2,00,000
Creditors	55,000	83,000	Stock	77,000	1,09,000
Bills payable	20,000	16,000	Bills receivable	20,000	30,000
Provision for taxation	40,000	50,000	Cash	15,000	10,000
Proposed dividend	42,000	50,000	bank	10,000	8,000
	6,77,000	8,17,000		6,77,000	8,17,000

Additional information:

Depreciation of Rs 10000 and Rs 20,000 has been charged on plant and land and building respectively
And interim dividend of Rs 20,000 has been paid
Income tax of Rs 35,000 has been paid.

From the following trial balance prepare profit and loss a/c and balance sheet for the year ended 31.03.02.

Particulars	Debit (Rs)	Particulars	Credit(Rs)
Plant at cost	3,00,000	Equity share capital	4,00,000
Land and Building	5,00,000	8% preference share capital	2,00,000
Investment in shares	2,00,000	Depreciation upto 31.03.01 Plant Building	1,00,000 1,50,000
Stock	70,000	Dividend equalization reserve	10,000
Bank	60,000	Profit and loss a/c on 1.4.01	25,000
Debtors	50,000	Creditors	30,000
Income tax deducted at source on dividend	2,200	Dividend (gross)	10,000
Establishment expenses	15,000	Miscellaneous receipts	2,300
Rent and taxes	6,000	Trading account balance	3,04,400
Audit fees (including Rs 1000 paid for other services	2,500
M.D.’s minimum remuneration	12,000
Directors fees	2,000
Sundry expenses	6,000
Income tax for previous year not provided	6,000
	12,31,700		12,31,700

You ascertain that:

Depreciation is to be charged on the written down value of plant @ 10% and land and building @ 5%
The directors propose to recommend a dividend of 15% on equity shares.
Provision for taxation is to be made at 55%.
D. is entitled to 5% on the net profits subject to a minimum of Rs.12,000 per annum.
A sum of Rs 15,000 is to be transferred to dividend equalization reserve.

Go To Main page