LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034
B.B.A. DEGREE EXAMINATION – BUSINESS ADMINISTRATION
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FOURTH SEMESTER – April 2009
BU 4502 – COMPANY ACCOUNTS
Date & Time: 24/04/2009 / 9:00 – 12:00 Dept. No. Max. : 100 Marks
PART-A (10 x 2 = 20 Marks)
Answer ALL questions
1.What is the meaning of forfeited shares?
2.What are the different types of underwriting?
3.Write a short note on redemption of debentures.
4.What is meant by ex-interest price and cum-interest price?
5.The provision for tax at the end of 31.03.2007 stood at Rs.300000.During2007-08 the tax
liabilities up to 31.03.2007 were settled for Rs.274000. provision required in respect of 2007-08
is Rs. 82000. How will you show provision for tax in profit &loss account?
- What are the objectives of cash flow statement?
7.How do you calculate time ratio and sales ratio?
8.In order to provide capital reduction scheme, a debenture holder of Rs. 400000 has agreed to
take over stock worth Rs. 100000 and book debts of Rs. 80000 in full satisfaction of the amount
due to him. Pass journal entry to record the above transaction.
9.Write a note on voluntary winding up.
10.Ascertain the value of an equity share under networth method from the following data
assuming preference shares have priority as to the payment of capital only :
10% preference shares of Rs.10 each fully paid : Rs 600000
Equity shares of Rs. 10 each fully paid : Rs 800000
Net assets available to shareholders : Rs.2800000
PART-B (5 x 8 = 40 Marks)
Answer any FIVE questions:
11.Define a share. Explain the various types shares.
12.PQR Ltd. issued 25000 shares of 100 each.The whole issue was underwritten by James. In
addition, there is firm underwriting of 3000 shares by James. Applications for 17000 shares
were received by the company in all. Calculate the liability of James.
- What is a debenture? How does it differ from a share?
- How will you deal with the following items while preparing a company’s final accounts for the
year ended 31.03.2009?
[a] Land& Buildings [cost Rs.1000000; depreciation provided
Rs. 160000] sold for Rs.1500000.
[b] Closing stock valued at market price Rs.1240000 instead of cost which was Rs.1300000.
15.Advance petro Ltd. was incorporated on 1-3-2008 to acquire a spice powder merchant’s
business as from 1-1-2008. The purchase consideration was agreed at Rs.60000 to be satisfied
by issue of 6000 equity shares of Rs.10 each. The shares were issued to vendor on 1-4-2008.
You are required to apportion the interest paid to vendor between pre and post incorporation
periods assuming the rate of interest is 6% p.a.
16.Explain the different kinds of Alteration of Share capital which do not require approval of a
court of law.
- On the date of liquidation of a company, the salaries of four clerks for four months at the rate
of Rs.7000 p.m. per clerk and salaries of four peons for three months at the rate of Rs.1500
p.m. per peon are outstanding. You are required to calculate the amount to be included in
preferential creditors and unsecured creditors.
- Allen runs a cosmetic store. His net assets on 31st Dec. 2008 amounted to Rs. 250000. After
paying rent of Rs.2500 a year and a salary of Rs. 12000 to his manager, he earns a profit of
Rs. 75000. His landlord is interested in acquiringthe business. 15% is considered to be
reasonable return on capital employed. Calculate the value of goodwill by capitalising super
profits.
PART-C (2 x 20 = 40 Marks)
Answer any TWO questions:
- ABC Ltd. had Rs. 400000 5% Debentures outstanding on 1.1.2008 [redeemable on 31.12.08]
on that date the sinking fund stood at Rs.374500, represented by Rs. 50000 own debentures
purchased at an average price of Rs.99 and Rs. 330000 3% stock. The annual installment
added to the fund was Rs.14200. On 31st Dec. 2008 the investments were realised at Rs. 98
and the debentures were redeemed.Write up the accounts for 2008.
20.Balance sheets of M/s. Green and Red as on 1st Jan.2008 and 31st Dec. 2008 were as follows:
Liabilities 1.1.08 31.12.08 Assets 1.1.08 31.12.08
Rs. Rs. Rs. Rs.
creditors 40000 44000 cash 10000 7000
Red’s loan 25000 – Debtors 30000 50000
Bank loan 40000 50000 stock 35000 25000
Capital 125000 153000 Machinery 80000 55000
Land 40000 50000
Buildings 35000 60000
Total 230000 247000 230000 247000
During the year machine costing Rs. 10000 [accumulated depreciaton Rs.3000] was sold for
Rs.5000. The provision for depreciation against machinery as on 1st Jan. 2008 was Rs. 25000
and on 31st Dec. 2008 Rs. 40000. Net profit for the year 2008 amounted to Rs. 45000.
Prepare Cash flow statement.
- The following was the Balance sheet of Bharat construction Ltd.as on 31st March 2009.
Liabilities Rs. Assets Rs.
Issued and paid up Goodwill 10000
capital Land& Buildings 20500
12000 shares of Machinery 50850
Rs. 10 each 1,20,000 Preliminary exp. 1500
Less: Stock 10275
calls in arrear Debtors 15000
Rs.3 per share Bank balance 1500
on 3000 shares 9000 Profit&loss a/c 20800
———- 1,11,000
Creditors 15,425
Provision for tax 4,000
Total 1,30,425 1,30,425
Machinery value was Rs. 10000 excess. It is proposed to write down this asset and to
extinguish the profit &loss a/c debit balance and to write off goodwill and preliminary expenses
by adoption of the following scheme:
[a] Forfeit the shares on which the call are outstanding ;
[b] Reduce the paid-up capital by Rs.3 per share;
[c] Re-issue the forfeited shares at Rs. 5 per share and
[d] Utilise the provision for tax if necessary.
You are required to draft the journal entries necessary and the
Balance sheet after carrying out the scheme.