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LOYOLA COLLEGE (AUTONOMOUS), CHENNAI 600 034
B.Com.DEGREE EXAMINATION -COMMERCE
SIXTH SEMESTER APRIL 2018
CO 6606- ADV. CORPORATE ACCOUNTS
Date: 03-05-2018 Dept. No. Max. 100 Marks
Time: 01:00-04:00
SECTION A
ANSWER ALL THE QUESTIONS (10X2=20 marks)
1. What is insurance?
2. What is Reinsurance?
3. What is Rebate on bills discounted
4. Explain the meaning of NPA
5. What is Minority Interest?
6. What is cost of control?
7. What is double account system?
8. What types of accounts are included in the final accounts of Electricity company?
9. What is purchase consideration?
10. What is Merger?
SECTION B
Answer any FOUR questions in this section: (4x10=40 marks)
11. What are the different types of Insurance?
The Revenue account of a Life Insurance Company showed the life fund at Rs.73,17,000 on 31.3.2006 before taking into account the following items:
Rs.
a.
Claims intimated but not admitted
98,250
b.
Bonus utilized in reduction of premium
13,500
c.
Interest accrued on investments
29,750
d.
Outstanding premiums
27,000
E
Claims covered under re insurance
40,500
f
Provision for taxations
31,500
Pass journal entries giving effect to the above adjustments and show the adjusted life fund.
12) Explain how the assets are classified for provisioning
The Trial Balance of the Nedungadi Bank ltd., as on 30th June 1984 shows the following balances
Rs.
Interest and discount
Rebate on bills discounted (1.7.83)
Bills discounted and purchased
45,40,600
4,750
3,37,400
The unexpired discount as on 30.6.84 is estimated to be Rs. 5,560. Draft necessary adjusting entries and calculate the amount of interest and discount to be credited to profit and loss account.
13) On 31stMarch 1996 the balance sheet of H Ltd and it subsidiary S Ltd stood as follows.
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Liabilities
H LTD
Rs.
S LTD
Rs.
ASSETS
H LTD
Rs.
S LTD
Rs.
Equity Share capital
General reserve
Profit and loss account
Sundry creditors
8,00,000
1,50,000
90,000
1,20,000
11,60,000
2,00,000
70,000
55,000
80,000
4,05,000
Fixed assets
75%Shares in S ltd. (at cost)
Other current assets
Stock
5,50,000
2,80,000
2,25,000
1,05,000
11,60,000
1,00,000

128,000
1,77,000
4,05,000
H Ltd acquired of the shares on 31.7.95. S Ltd earned profit of Rs. 45,000 for the year ended 31st March, 1996
Calculate the cost of control or goodwill.
14) Explain Disposal of Surplus.
The Bangalore Municipal corporation replaces part of its existing water mains with larger mains at the cost of Rs. 75,00,000. The original cost of laying the old mains was Rs. 15,00,000 and the present cost of laying those mains would be three times the original cost. Rs. 1,25,000 was realized by the sale of old materials and old materials of Rs. 3,75,000 were used in the replacement and included in the cost given above. Show the allocation of expenses between revenue and capital.
15) Ganguly ltd was formed with an authorized capital of Rs. 12,00,000 divided into equity shares of Rs. 10
each to acquire the business of A and B whose balance sheet on the date of acquisition was as follows:
liabilities
Rs.
Assets
Rs.
Capital
General reserve
Sundry creditors
6,00,000
4,00,000
2,00,000
12,00,000
Freehold premises
Stock
Sundry debtors 1,60,000
Less: provision for bad debts 10,000

Cash at bank
7,00,000
2,00,000
1,50,000
1,50,000
12,00,000
The purchase consideration was agreed upon at Rs. 14,00,000 to be paid in Rs. 12,00,000 fully paid equity shares at Rs.11 and the balance in cash. Prepare the Balance sheet.
16) Don Allot Ltd was formed to take over the assets and liabilities of Shi Laxman and to acquire the
adjacent premises. The Balance sheet of Shri.Laxman on 31st December 1998 was as follows.
Liabilities
Rs.
Assets
Rs.
Trade creditors
Capital
8,000
1,60,000
1,68,000
Cash in hand
Cash at bank
Book debts
Stock
Furniture
Land buildings
2,000
12,000
18,000
78,000
10,000
48,000
1,68,000
The purchase consideration was agreed at Rs. 2,00,000 and was to be paid as under:
1. 5,600 equity shares of Rs. 20 each, fully paid
2. Rs. 68,000 in preference shares of Rs. 100 each issued at par.
3. Rs. 20,000 in cash
All the assets and liabilities were valued as per above balance sheet except the book debts which were subject to a bad debts provision of
The company raised further capital by issue of 15,000 equity shares of Rs. 20 each
The adjoining premises were purchased for Rs. 1,00,000 and additional stock of Rs. Rs. 1,40,000 was obtained from open market
Record the above transactions in the books of Don Allot ltd through journal entries .
17) Explain the following terms:
Amalgamation, Absorption, External Reconstruction. Intrinsic Value of shares.
SECTION C
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Answer any TWO questions in this section: (2x20=40 marks)
18) The following Trial Balance was extracted from the books of the New Bharat Life Assurance Co ltd. As
on 31st March 1989
Dr.
Cr.
Paid up share capital 10000 shares of Rs. 10 each
Life Assurance fund as on 1-4-1988
Dividends paid
Bonus to policy holders
Premium received
Claims paid
Commission paid
Management expenses
Mortgages in India
Interest and dividend received
Agents' balances
Freehold premises
Investments
Loan on company's policies
Cash on deposit
Cash in hand and on current account
surrenders


15,000
31,500

1,97,000
9,300
32,300
4,92,200

9,300
40,000
23,05,000
1,73,600
27,000
7,300
7,000
33,46,500
1,00,000
29,72,300


1,61,500




1,12,700







33,46,500
You are required to prepare the company's Revenue account for the year ended 31st March 1989 and its balance sheet as on that date after taking the following matters into consideration
Rs.
Claims admitted but not paid
9,300
Management expenses due
200
Interest accrued
19,300
Premium outstanding
12,000
19) On 31st December 1986, the following balances stood in the books of Asian Bank ltd., after preparation
of its profit and loss account
Rs.
Share capital:
Issued and subscribed
Reserve fund (under section 17)
Fixed deposits
Savings bank deposits
Current accounts
Money at call and short notice
Investments
Profit and loss account[cr] 1-1-1986
Dividend for 1985
Premises
Cash in hand
Cash with RBI
Cash with other banks
4,000
6,200
42,600
19,000
23,200
1,800
25,000
1,350
400
2,950
380
10,000
6,000
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Bills discounted and purchased
Loans, cash credits and over drafts
Bills payable
Unclaimed dividnd
Rebate on bills discounted
Furniture
Other assets
Net profit for 1986
3,800
51,000
70
60
50
4,750
1,164
336
1,550
Prepare balance sheet of the bank as on 31sr December 1986.
20) .The following are the Balance sheet of H ltd and its subsidiary S ltd as on 31.3.1995
Liabilities
H ltd
Rs.
S ltd
Rs.
Assets
H ltd
Rs.
S ltd
Rs.
Share capital
Rs. 10 each fully paid
General reserve
Profit Loss a/c
Creditors
6,00,000
1,50,000
70,000
90,000
9,10,000
2,00,000
70,000
50,000
60,000
3,80,000
Machinery
Furniture
70% shares in S ltd at cost
Stock
Debtors
Cash at bank
Preliminary expenses
3,00,000
70,000
2,60,000
1,75,000
55,000
50,000

9,10,000
1,00,000
45,000
1,89,000
30,000
10,000
6,000
3,80,000
H ltd acquired the shares of S ltd on 30th June 1994. On 1st April 94, S ltd's general reserve and Profit Loss account stood at Rs. 60,000 and 20,000 respectively. No part of the preliminary expenses was written off in the year ended 31.3. 95.
Prepare consolidated Balance sheet of H ltd. and its subsidiary S ltd. as on 31.3.95.
21) The following is the balance sheet of S Ltd which is absorbed by K Ltd.
Liabilities
Rs.
Assets
Rs.
Share capital
Rs. 10 each fully paid
Preference Share capital (100 each)
Current Liabilities
10% Debentures
6.00,000
2,00,000
1,00,000
3,00,000
Fixed Assets:
Machinery
Buildings
Current Assets:
Stock
Debtors
Profit& Loss A/C
3,40,000
1,60,000
4,00,000
2,00,000
1,00,000
12,00,000
12,00,000
K Ltd takes over S Ltd on the following terms:
Take the fixed assets at 10% depreciation, Stock at Rs.3,00,000 and debtors after a provision of 25%.
Debentures are to be settled by issuing them debentures in K Ltd. Current liabilities will be
taken over at book values.
3 The consideration will be discharged by issue of 10,000 equity shares of Ts.10 each in K Ltd at
an agreed value of Rs.15 per share and the balance in cash.
Expenses of liquidation of Rs.20,000 will be reimbursed by K Ltd.
You are required to give journal entries in both books assuming that it is in the nature of purchase.