LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034
B.Com. DEGREE EXAMINATION – CORPORATE SECRETARYSHIP
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 31st December 1997 is given to you Rs.
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 30th June and 31st December and the same was duly paid.
On 31st 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 31st 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 31st 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:
|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|
- 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.
|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|
|Profit and loss account||30,000||48,000||Debtors||1,60,000||2,00,000|
|Bills payable||20,000||16,000||Bills receivable||20,000||30,000|
|Provision for taxation||40,000||50,000||Cash||15,000||10,000|
- 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.
|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
|Stock||70,000||Dividend equalization reserve||10,000|
|Bank||60,000||Profit and loss a/c on 1.4.01||25,000|
|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|
|Income tax for previous year not provided||6,000|
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.