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LOYOLA COLLEGE (AUTONOMOUS), CHENNAI 600 034
B.Com.DEGREE EXAMINATION -COMMERCE
FOURTH SEMESTER APRIL 2018
CO 4502- COMPANY ACCOUNTS
Date: 09-05-2018 Dept. No. Max. 100 Marks
Time: 09:00-12:00
PART-A
ANSWER ALL QUESTIONS MARKS)
1. For what purposes "Securities premium" can be used?
2. Y Ltd forfeited 1000 equity shares of Rs.10 each,issued at a discount of 10% for non-payment of first call of Rs.2 and the final call of Rs.3 per share. Show necessary Journal entry.
3. What are 'convertible debentures'?
4. Z Ltd redeemed Rs.10,000. 12% Debentures, out of capital by drawing a lot and it has also redeemed Rs.20,000. 10% debentures out of profit by drawing a lot Journalize.
5. What is the maximum rate of Managerial remuneration in case of a public limited company?
6. What is meant by revenue from operations?
7. What is meant by Alteration of share capital?
8. In order to provide funds for capital reduction scheme a debenture holder of Rs.4,00,000 has agreed to take over stock worth Rs.1,00,000 and book debts of Rs.80,000 in full satisfaction of the amount due to him pass Journal entry to record the above transactions .
9. How do you determine 'Fair value' of shares?
10. Calculate Liquidator's remuneration from the following particulars:Assets realized Rs.6,30,000 including cash balance Rs.30,000 Liquidator's remuneration-2% on the assets realized.
PART-B
ANSWER ANY FIVE QUESTIONS MARKS)
11. Write a short note on:
Marked Application
Firm underwriting
Underwriting commission on shares and debentures
12.The following particulars relate to a company, which has gone into voluntary liquidation. Prepare
Liquidator's final statement of account, allowing for his remuneration at on the amount distributed to
unsecured creditors other than preferential creditors.
Rs.
Preferential creditors 24,200
Unsecured creditors 1,32,100
Liquidation expenses 1,000
Assets realized 1,51,000
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13. The following is the balance sheet of A Ltd as on 31.3.2018:
Liabilities
Rs.
Assets
Rs.
Equity share capital
Redeemable preference share capital
General reserve
Sundry creditors
5,00,000
2,00,000
1,50,000
1,00,000
Sundry assets
Bank
7,60,000
1,90,000
Total
9,50,000
Total
9,50,000
On the above date, the preference shares has to be redeemed for this purpose, 1000 equity shares of Rs.100 each were issued at Rs.110. The shares were immediately subscribed and paid for. The preference shares were duly redeemed. Give journal entries and balance sheet after redemption.
14.Mohit Ltd which has Rs.10,00,000 debentures of Rs.100 each. Outstanding on 1.1.1996 on which
interest is payable on 30th June and 31st December each year is permitted to purchase its own debenture in the open market and cancel them or retain them or resell them as its option.
The company made the following purchase in the open market on 1.4.1996: 500 debentures at Rs.97 at ex-interest.
Give appropriate journal entries if, the debentures were cancelled on the same day; the debentures were retained till 1.7.1996 on which date they were cancelled.
15. What is cash flow statement? What are its uses?
16. What is goodwill? Discuss the factors affecting the valuation of goodwill.
17. Ganesh Ltd was registered on 1.7.2017 to acquire a running business of S Co with an effect from
1.1.2017. The following was the P&L A/c of the company on 31.12.2017:
Particulars
Dr.
Particulars
Cr.
To Office expenses
To Formation expenses (written off)
To Stationary and postages
To Selling expenses
To Director fees
To Net Profit
54,000
10,000
5,000
60,000
20,000
76,000
By Gross Profit b/d
2,25,000
Total
2,25,000
2,25,000
You are required to prepare a statement showing profit earned by the company in the pre and post incorporation periods. The total sales for the year took place in the ratio of 1:2 before and after incorporation respectively.
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PART-C
ANSWER ANY TWO QUESTIONS MARKS)
18. Moon and Star Ltdis a company with the authorized capital of Rs.5,00,000 divided into 5000 equity
shares of Rs.100 each on 31.12.2017 of which 2,500 shares were fully called up. The following are the
balances extracted from the ledger as on 31.12.2017:
Trial Balance of Moon and Star Company Ltd
Particulars
Dr.
Particulars
Cr.
Opening stock
Purchases
Wages
Discount allowed
Insurance (up to 31.3.2018)
Salaries
Rent
General expenses
Printing
Advertisements
Bonus
Debtors
Plant
Furniture
Bank
Bad debts
Calls-in-arrears
50,000
2,00,000
70,000
4,200
6,720
18,500
6,000
8,950
2,400
3,800
10,500
38,700
1,80,500
17,100
34,700
3,200
5,000
Sales
Discount received
Profit and Loss A/C
Creditors
Reserves
Loan from managing director
Share capital
3,25,000
3,150
6,220
35,200
25,000
15,700
2,50,000
Total
6,60,270
Total
6,60,270
You are required to prepare Profit and Loss Account for the year ended 31.12.2017 and a balance sheet as on that date. The following further information is given:
a. Closing stock was valued at Rs.1,91,500.
b. Depreciation on plant at 15% and on furniture at 10% should be provided.
c. A tax provision of Rs.8,000 is considered necessary.
d. The directors declared an interim dividend on 15.8.2017 for 6 months ending June 30, 2017 at 6%.
19. A Ltd issued 10,000 shares of Rs.10 each payable as follows:
Rs. 3 on application
Rs.3 on allotment
Rs.4 on first and final call
The company received 13,000 applications from the public. Applications for 1,500 were rejected and the excess application money received on the other 1,500 shares was adjusted towards allotment. All the amounts due on shares were received except the call money on 500 shares, which were forfeited after due notice. Later 400 of the forfeited shares were reissued at Rs.8 per share. Pass journal entries and prepare balance sheet.
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20. On 31st December 2017 the balance sheet of Ganesh Ltd was as follows:
Liabilities
Rs.
Assets
Rs.
Equity share capital: 15,000 shares of Rs.100 each fully paid
Profit and Loss A/c
Sundry creditors
Bank overdraft
Provision for taxation
Dividend equalization fund
15,00,000
3,09,000
3,31,000
60,000
1,35,000
2,25,000
Land and Building
Plant and Machinery
Stock
Sundry Debtors
6,60,000
2,85,000
10,50,000
4,65,000
Total
24,60,000
Total
24,60,000
The net profit of the company after deducting all working charges and providing for depreciation and taxation were as under:
2013 Rs. 2,55,000; 2014 Rs. 2,88,000; 2015 Rs.2,70,000; 2016 Rs.3,00,000; 2017 Rs.2,85,000
On 31.12.2017 Land and Building were valued at Rs.7,50,000 and Plant and Machinery at Rs.4,50,000. In view of the nature of the business, it is considered that 10% is a reasonable return on capital.
Calculate the value of company shares after taking into account the revised value of fixed assets and your own valuation of goodwill based on 4 years purchase of the annual super profits.
21. The company went into liquidation on 31.3.2018 when the following Balance Sheet was prepared:
Liabilities
Rs.
Assets
Rs.
Authorized capital
4,000 shares of Rs.10 each
Issued capital
3,000 shares of Rs.10 each
Unsecured creditors
Partly secured creditors
Preferential creditors
Bank Overdraft (unsecured)
40,000
30,000
15,432
5,836
810
232
Goodwill
Freehold property
Machinery
Stock
Debtors
Cash
P&L A/c
6,960
5,000
7,480
11,710
9,244
100
11,816
Total
52,310
Total
52,310
a. The liquidator realized the assets as follows: Freehold property which was used in the first instance to pay the partly secured creditors pro-rata Rs.3,600; Machinery Rs.5,000; Stock Rs.6,200; Debtors Rs.8,700; Cash Rs.100.
b. The expenses of liquidation amount Rs.100 and the liquidators remuneration was agreed at 2.5% on the amount realized, including cash and on the amount paid to unsecured creditors.
Prepare liquidator's final statement.