M.Com. DEGREE EXAMINATION, NOVEMBER 2017
First Semester
Commerce
ADVANCED CORPORATE ACCOUNTING
(CBCS 2014 onwards)
Time 3 Hours Maximum 75 Marks
Section A (10 X 2 20)
Answer all questions.
1. Give Journal entries of calls in arrears and calls in
advance.
2. What do you mean by price band?
3. Give the treatment for Profit or Loss prior to
incorporation.
4. How will you calculate super profit method?
5. What are the necessary accounting entries in alteration
of capital?
6. Give the meaning of purchase consideration.
7. What do you mean by voluntary winding up?
8. What do you mean by secured creditors?
9. What is mutual obligation?
10. Give the meaning of minority interest.
Sub. Code
4MCO1C2
AFF-4797
2
Ws8
Section B X 5 25)
Answer all the questions.
11. Pallava Ltd. has a share capital of 50,000 equity
shares of Rs. 100 each. Market value is Rs.100 each.
Market value is Rs. 250 per share. The company
decides to make a rights issue to the existing
shareholders in proportion of one new rights share
of Rs. 100 at a premium of Rs. 30 per share for
every 5 shares held. Calculate the value of right
share.
Or
Excel Ltd. made the following issues of debentures
on 1.4.97. 1200 10% debentures of 100 each to settle
a creditor who supplied a machine on credit some
time ago at a price of Rs. 18,000. 2300,
10% debentures of Rs. 100 each for cash at a
discount of 5%. 31000, 10% debentures of Rs. 100
each to the bankers as collateral security for a loan
of Rs. 80,000. All the above issues are redeemable at
par. Pass the journal entries to record the above in
the books of the company and show how these items
are to be shown when the company's balance sheet
is prepared.
12. Arul and Balu agreed to sell their business to
a limited company from 1.1.97 but the
company was legally incorporated on 1.5.97
and prepared final accounts on 31.12.97.
It was observed that the sales were uniform
up to the date of incorporation but went up by
50% on average thereafter.
Calculate the weighted sales ratio
AFF-4797
3
Ws8
Murugan Ltd, was formed on 1-7-96 to acquire
the business of Johnson sons with effect
from 1.1.96 when the company's first accounts
were prepared on 31.12.96, the following were
noted: sales for the year Rs. 3,00,000. Sales in
January, February, April, and May were only
50% of the annual average. Sales of august,
September and December was twice the
annual average. Calculate weighted sales
ratio.
Or
The following are the information is presented for
five years ending 31st Dec. 1998
Year Profits (after
tax)
Taxation Transfer to
reserve
Directors
remuneration
1994 25,000 9,000 5,000 2,000
1995 27,500 10,000 6,000 2,250
1996 24,000 7,500 4,000 2,250
1997 32,500 12,500 7,500 2,500
1998 36,000 17,500 7,500 3,000
Fixed assets have been revalued and the same
showed on appreciation of 2,50,000 (depreciation to
be provided for The company has a
preference share capital of Rs. 50,000. The current
rate of taxation may be taken as 50%. Calculate the
value of goodwill on the basis of four years purchase
of the last five years' average profits.
AFF-4797
4
Ws8
13. ABC company Ltd. passed resolution and got court
permission for the reduction of its share capital by
Rs. 5,00,000 for the purpose mentioned under
To write off the Debit balances of P L of
Rs. 2,10,000
To reduce the value of investments by
Rs. 80,000, to reduce the value of plant and
machinery by Rs. 90,000 and goodwill by
Rs. 40,000. The reduction was made by
converting 50,000 preference shares of Rs. 20
each fully paid to the same number of the
preference shares of Rs. 15 each fully paid and
by converting 50,000 equity shares of Rs. 20
each on which Rs. 15 is paid up into 50,000
equity shares of Rs. 10 each fully paid up. Pass
journal entries to record the share capital
reduction.
Or
Following is the balance sheet of Samy Ltd. as on
31-3-2004
Liability Amt Assets Amt
Share capital: Fixed assets 16,25,000
preference shares Current assets 5,50,000
of Rs.100 each. 3,75,000
Equity shares of
rsw 10 each 7,50,000
General reserve 4,50,000
debentures 3,50,000
Current liabilities 2,50,000
Total 21,75,000 Total 21,75,000
AFF-4797
5
Ws8
Romy Ltd. agreed to take over the business of
Samy Ltd.
Calculate purchase consideration under net
assets method on the basis of the following
Romy Ltd agreed to discharge
debentures at a premium of 10% by
issuing debentures of Romy Ltd.
Fixed assets are to be revalued at 10%
above book value, the investments at
par, and current assets at 10% discount
and current liabilities at book value.
Calculate purchase consideration under net
payments method on the basis of the
following
Romy Ltd. agrees to discharge the
debentures at a premium of 10% by
issuing debentures of Romy Ltd.
Preference shares are discharged at a
premium of 10% by issuing 10%
preference shares of Rs. 100 each of
Romy Ltd.
For every 2 equity shares in Samy Ltd.
3 equity shares of Rs. 10 each in Romy
ltd will be issued in addition to cash
payments of Rs. 3 per equity share in
Samy Ltd.
14. Discuss the modes of winding up.
Or
The following balances were extracted from the
books of sudden death Ltd. on 31.12.2006 on which
date a winding up order was made: Entry for
accrued salary of Rs. 4,000 and rent of Rs. 2,000 has
still to be made in the books. Prepare a statement of
affairs and a deficiency A/c
AFF-4797
6
Ws8
Particulars Amt
Share capital
Equity shares -20,000 shares of Rs.10 each,
Rs.8 per share called up 1,60,000
Preference shares-2000 shares of Rs. 100
each fully paid 2,00,000
Calls-in-arrears on equity shares-estimated
to realize Rs. 600 1,000
15% debentures secured by first floating
charge on assets 2,00,000
Bank overdraft secured by a second floating
charge on the assets 1,00,000
Fully secured creditors (Secures against
plant and machinery) 60,000
Investments (estimated to realize Rs. 60,000) 80,000
Plant and machinery- secured creditors 80,000
Estimated to realize 80,000 1,20,000
Land buildings estimated to
realize Rs. 80,000 40,000
Rent and Taxes 4,000
Wages and salaries 3,000
Bills payable 24,000
Sundry creditors 60,000
Bills receivables-estimated to realize Rs. 2,000 6,000
Debtors-estimated to realize 60% 1,40,000
Bills discounted Rs. 30,000 likely to rank 8,000
Contigent liability likely materialize 6,000
Stock-in-trade- estimated to produce Rs. 38,000 60,000
Cash in hand and at bank 60,000
AFF-4797
7
Ws8
15. When does a company become a holding company?
Or
Write down the steps involved in preparation of
consolidated balance sheet?
Section C X 10 30)
Answer any three questions.
16. The following is the summarized balance sheet of Don
Bosco Ltd. as on 31st March 1998
Liabilities Amt Assets Amt
Share Capital Sundry assets 6,20,000
Authorized 15000 Bank 2,10,000
redeemable
preference shares of
Rs.10 each 1,50,000
5,000 equity shares of
Rs. 10 each 50,000
Paid up capital
11,000 redeemable
preference shares of
Rs.10 each. 1,10,000
30,000 equity shares of
Rs.10 each fully paid 3,00,000
Profit Loss A/c 2,00,000
Reserve Fund 1,50,000
Sundry Creditors 20,000
8,30,000 8,30,000
AFF-4797
8
Ws8
On 6th April 1998, the preference shares were redeemed
at a premium of Rs.4 per share. The company could not
trace the holders of 1,200 preference shares. On 8th April
1998, a bonus issue of one fully paid equity share for four
shares held was made. Show the journal entries to record
the above transactions and also prepare balance sheet
after redemption.
17. The authorized capital of Gower Ltd. is Rs. 6,00,000
consisting of 3000 preference shares of 100 each and
30,000 equity shares of Rs. 10 each. The balances
appearing in the books on 31.12.1998 were as shown
below
Particulars Amt Particulars Amt
Investments in Sundry creditors 87,850
shares at cost 50,000 pref share capital 2,00,000
Purchases 4,90,500 Equity share capital 2,00,000
Packaging charges 18,000 mortgage
Delivery expenses 35,400 debentures secured
Stock 1.1.98 1,45,200 on free hold properties 1,50,000
Salaries and wages 52,000 Dividend and
Rent and rates 17,500 interest 4,250
Freight and Profit Loss A/c 28,500
carriage outward 8,200 Sales 6,70,350
Final dividend for 1997 12,000 Bank Over draft by
Preference dividend hypothentication
half year to 30.6.98 6,000 stocks receivables 1,50,000
Discount on issue of
debentures 2,000
Preliminary expenses 1,000
Bills receivable 41,500
AFF-4797
9
Ws8
Particulars Amt Particulars Amt
Interest on
Bank Over Draft 7,800
Debenture interest
half year to 30.6.98 3,750
Sundry debtors 50,100
Freehold property at cost 3,50,000
Furniture at cost less
depreciation of Rs. 15,000 35,000
Taxation advance
for 1998 15,000
Technical knowhow
at cost 1,50,000
Total 14,90,950 Total 14,90,950
You are required to prepare profit loss account for the
year ended 31st Dec.1998 and balance sheet on that date
after taking into account the following
Closing Stock valued Rs. 1,42,500
Purchases include Rs. 5,000 worth of goods and
articles for distribution among valued customers.
Salaries and wages include Rs.2,000 being wages
incurred for installation of electrical fittings in the
factory. Electrical fittings have been recorded under
furniture. Bills receivables include Rs. 1,500 being
dishonored bills. 50% of Rs. 1,500 has been
considered to be irrecoverable. Bill of Rs. 2,000
maturing after Dec.1998 was discounted.
Charge depreciation 20% on furniture. Write off
50% of discount on debentures. Dividend at
proposed on equity share capital, provision for
taxation Rs. 8000, technical Know-how is to be
written off over a period of 15 years.
Salaries and wages include Rs. 10,000 being the
director's remuneration. Previous year's figures not
maintained.
AFF-4797
10
Ws8
18. Babu Ltd. is to absorb Sobha Ltd. the purchase
consideration is the issue of 5 shares of Rs. 10 each at
10% premium for every 4 shares held in Sobha Ltd. the
Balance sheets on the date of absorption were as under
Liabilities A Ltd.
Rs.
B Ltd.
Rs.
Assets A Ltd.
Rs.
B Ltd.
Rs.
Share capital Fixed assets
(Rs. 10 each) 20,00,000 12,00,000 Investments 16,00,000 8,00,000
Reserves 2,00,000 1,60,000 24,000 shares
Creditors 4,00,000 2,40,000 in Sobha Ltd. 3,20,000
20,000 shares
in Babu Ltd. 2,40,000
Current Assts 6,80,000 5,60,000
Total 26,00,000 16,00,000 26,00,000 16,00,000
Prepare ledger accounts in the books of Sobha Ltd. and
journal entries in the books of Babu Ltd. along with
balance sheet after the absorption.
19. On 31.3.1998 the date of liquidation of a company, its
balance sheet was as under.
Liabilities Amt Assets Amt
Share capital Land and Buildings 4,00,000
preference shares Plant and Machinery 1,60,000
6000 equity Each Stock 4,00,000
Rs. 8 paid up 3000 Debtors 6,40,000
equity shares of Cash at bank 51,000
Rs. 10 each 3,00,000
Rs.7 paid up
debentures
of Rs. 100 each 21,000
Outstanding interest on 12,00,000
Debentures 72,000
Creditors 48,000
Bills payable 10,000
16,51,000 16,51,000
AFF-4797
11
Ws8
The assets were realized as under
Land and Buildings Rs. 3,50,000; Plant and machinery.
Rs. 2,00,000 Debtors Rs. 6,00,000; Stock Rs. 4,61,000;
Liquidation expenses-Rs. 2,000. Remuneration of
Liquidator: ½% on the assets realized including cash and
on the amount paid to unsecured creditors. Creditors
shown in the balance sheet included Rs. 2,000
preferential. Interest on debenture is to be paid up to
31.5.98. Dividend on preference shares is in arrears for
1½ years. Legal charges Rs. 1,000. Find out the
liquidators final statement of accounts.
20. A Ltd. acquired 1,600 ordinary shares of Rs. 100 each
B Ltd on 31st December 1989, their summarized balance
sheets as on that date were as under
Liabilities A Ltd.
Rs.
B Ltd.
Rs.
Assets A Ltd.
Rs.
B Ltd.
Rs.
Capital Land and
5000 ordinary Buildings 1,50,000 1,80,000
shares of Plant and
Rs. 100 each 5,00,000 Machinery 2,40,000 1,09,400
2000 ordinary Investments in
shares of B Ltd at cost 3,40,000
Rs. 100 each 2,00,000 Stocks 1,20,000 36,000
Capital Debtors 44,000 40,000
reserve 1,20,000 Bills receivable
General (including
reserve 2,40,000 Rs. 3,000
Profit and from B Ltd.) 15,800
Loss A/c 57,200 36,000 Cash and Bank 14,500 8,000
Bank
Overdraft 80,000
Bills payable
(including
Rs. 4,000
to A Ltd) 8,400
Creditors 47,100 9,000
9,24,300 3,73,400 9,24,300 3,73,400
AFF-4797
12
Ws8
You are supplied the following Information
B Ltd. had made a bonus issue on 31st December
1989 one ordinary share for every two shares held
by its' shareholders. Effect has yet to be given in the
accounts for the issue.
The directors are advised that Land and Buildings
of B Ltd, are undervalued by Rs.20,000 and Plant
and Machinery of B Ltd. over valued by Rs. 10,000.
These assets have to be adjusted accordingly.
Sundry creditors of Ltd. include Rs. 12,000 due,
to Ltd. you are required to prepare the
consolidated balance sheet as on 31st December
1989.