Corporate Accounting Question Paper May' 2015, Dibrugarh University B.Com 2nd/4th Sem

Dibrugarh University Corporate Accounting Question Papers
Corporate Accounting Question Paper 2015 (May)
COMMERCE (General/Speciality)
Course: 203 (Corporate Accounting)
The figures in the margin indicate full marks for the questions
Full Marks: 80
Pass Marks: 32
Time: 3 hours

1. (a) State the following statements whether ‘True’ or ‘False’: 1x3=3

i. A debenture holder is a creditor of the company.

ii. Out of face value of the shares, at least 20% is payable with application.

iii. Internal Reconstruction and Reduction is Share Capital means the same.

(b) Fill in the blanks: 1x3=3

i. The Companies Act, 1956 defines a subsidiary company under Section ____.

ii. Preliminary Expenses are of ____ nature.

iii. Consolidated Financial Statements are prepared as per Accounting Standard ____.

i. Preference Shareholders are

1)Creditors of the company.

2)Owners of the company.

3)Customers of the company.

ii. A contributory is a

1)Debenture holder.

2)Share holder.

3)Creditor.

2. Write brief notes on (any four): 4x4=16

a) Redeemable Preference Share.

b) Payment of dividend out of capital profit.

c) Determination of purchase consideration.

d) Minority Interest.

e) Forfeiture of share.

3. (a) Dhanshiri Co. Ltd. Issued 30000 shares of Rs. 100 each at a premium of 10% payable as under:-

On Application – Rs. 30

On Allotment – Rs. 60 (including premium)

On Call – Rs. 20

Bitul, holding 1000 shares failed to pay the allotment and call money. Ratul, holding 1800 shares failed to pay the call money. All these shares were forfeited and subsequently 1900 shares (including 900 shares of Ratul) reissued as fully paid-up for 80 per share. Give Journal Entries to record the above transactions and show the Balance Sheet of the company. 10+4=14

(b) (i) Under what circumstances can a company issue shares at a discount? 5

(ii) Jokai Tea Ltd. issues 1000, 10% convertible debentures of Rs. 100 each. Give Journal Entries in each of the following cases: 3x3=9

1) The debentures are issued at par and redeemable at par.

2) The debentures are issued at 5% premium and redeemable at 10% premium.

3) The debentures are issued at 5% discount and redeemable at 5% premium.

4. (a) Explain the treatment of the under-mentioned items in the preparation of final accounts of a company:

i. Preliminary expenses. 3 ½ x4=14

ii. Provisions and reserves.

iii. Advance payment of tax.

iv. Managerial remuneration.

(b) Examine the relevance of Accounting Standards and IFRS in the preparation of financial statement of companies. 7+7=14

5. (a) Distinguish between the following: 7+7=14

i. Amalgamation in the nature of Merger and Amalgamation in the nature of purchase.

ii. Pooling of interest method and Purchase method of amalgamation.

(b) Ganapati Co. Ltd. had the following Ledger balances as on 31^st March, 2015:

Cr. Balances	Rs.	Dr. Balances	Rs.
Issued and subscribed capital: 8000 shares of Rs. 100 each fully paid 800, 6% Debentures of Rs. 1,000 each Bank Overdraft Sundry Creditors Bills Payable	8,00,000 8,00,000 2,40,000 3,00,000 1,00,000	Goodwill Land and Buildings Plant and Machinery Stock Sundry Debtors Cash at Bank Preliminary Expenses Profit & Loss A/c (Dr.)	2,40,000 3,60,000 8,00,000 1,88,000 1,84,000 50,000 24,000 3,94,000
	22,40,000		22,40,000

The following scheme of reconstruction was adopted:

a) Without altering the number of shares in issued and subscribed capital, the face value and paid-up value of each share was to be reduced to Rs. 50.

b) The existing debentures be converted into 400, 7 ½ % debentures of Rs. 1,000 each, fully paid.

c) The assets be revalued as under:

Land and Building – Rs. 3,28,000

Plant and Machinery – Rs. 7,20,000

Stock – Rs. 1,78,000

Sundry Debtors subject to a Bad Debts provision of Rs. 20,000

d) Goodwill, Preliminary Expenses and the debit balance of Profit & Loss A/c will be completely written off.

Give Journal Entries to implement the above scheme and prepare the Balance Sheet after the reconstruction scheme is carried through. 8+6=14

6. (a) (i) Give the legal definition of holding company and a subsidiary company. 6

(ii) Mention four advantages and four disadvantages of a holding company. 4+4=8

(b) On 31^st March, 2015 the ledger balances of H Ltd. and its subsidiary S. Ltd. stood as follows:

Cr. Balances	H Ltd. Rs.	S Ltd. Rs.	Dr. Balances	H Ltd. Rs.	S Ltd. Rs.
Equity Shares Capital General Reserves Profit & Loss A/c Creditors	8,00,000 1,50,000 90,000 1,20,000	2,00,000 70,000 55,000 80,000	Fixed Assets 75% Equity Shares in S Ltd. (at cost) Stock Other Current Assets	5,50,000 2,80,000 1,05,000 2,25,000	1,00,000 --------- 1,77,000 1,28,000
	11,60,000	4,05,000		11,60,000	4,05,000

Draw the Consolidated Balance Sheet as on 31^st March, 2015 after taking into consideration the following information also: 14

a) H Ltd. acquired the shares on 31^st July, 2014.

b) S Ltd. earned a profit of Rs. 45,000 for the year ended 31^st March, 2015.

c) In January 2015, S Ltd. sold to H Ltd. goods costing Rs. 15,000 for Rs. 20,000. On 31^st March, 2015, half of these goods were lying unsold in the godown of H Ltd.

(Old Course)

Full Marks: 80

Pass Marks: 32

1. (a) Choose the correct answer and fill in the blanks: 1x5=5

a) Profit on reissue of forfeited shares is transferred to ____ (Capital Reserve/General Reserve).

b) In case of cum-interest price, the interest accrued on debenture is ____ (included/excluded) in the price quoted.

c) Accounting for amalgamation is associated with Accounting Standard ____ (14/15/16)

d) In liquidation, liquidator’s final statement of account shows ____ (cash receipts and payments/assets and liabilities).

e) Profit & Loss A/c balance including reserves after acquisition, is considered as ____ (capital profit/ revenue profit).

(b) State the following items whether ‘True’ or ‘False’: 1x3=3

a) External reconstruction means reduction of share capital of a company which is to be reconstructed.

b) Consolidated financial statements are prepared as per Accounting Standard – 21.

c) A debenture holder is the owner of a company.

2. Write short notes on the following: 4x4=16

a) Legal provisions in respect to redemption of preference shares.

b) Redemption of debentures by sinking fund method.

c) Four points of distinction between bonus shares and right shares.

d) Minority interest.

3. (a) XYZ Co. invited applications for 10000 shares of Rs. 100 each. The shares were issued at a premium of 10%. The amount was payable as follows:

On Application – Rs. 20

On Allotment – Rs. 40 (including premium of Rs. 10)

The balance on first and final call

Applications for 15000 shares were received. Applications for 3000 shares were rejected and allotment was made to the remaining applicants on pro-rata basis. All calls were made and were duly received except the final call on 100 shares. These shares were forfeited and reissued at Rs. 110 per shares as fully paid up. Pass necessary Journal Entries and prepare the Balance Sheet in the books of the XYS Co. 7+5=12

(b) Write in brief the latest SEBI guidelines (prior to the Companies Act, 2013) for disclosure and investor protection pertaining to issue of bonus shares. 12

4. (a) On 1^st January, 2010 Ashok Co. Ltd. Issued 1000, 6% debentures of Rs. 100 each, repayable at par at the end of 4 years. It was decided to create a sinking fund for repayment of the debentures and invest the amount of fund in 6% Government Securities. Show the Ledger A/c for 4 years assuming that the investments were realized for Rs. 70,000 only and the debentures were paid-off at the end of the period. Annual installment to provide Rs. 1 at the end of 4 years at 6% compound interest is Rs. 0.228591. 10

(b) Define debenture. Which is the best method of redemption of debenture? Justify your opinion. 4+6

5. (a) The summarized Balance Sheet of Ranjan Ltd. as on 31^st March, 2013 was as follows:

Liabilities	Rs.	Assets	Rs.
Shares of Rs. 10 fully paid General Reserve Profit & Loss A/c 12% Debentures Creditors	6,00,000 1,70,000 1,10,000 1,00,000 20,000	Goodwill Land and Buildings & Plant Stock Debtors Cash	1,00,000 6,40,000 1,68,000 36,000 56,000
	10,00,000		10,00,000

Anjan Ltd. agreed to absorb the business of Ranjan Ltd. with effect from 1^st April, 2013. The purchase consideration payable by Anjan Ltd. was agreed as follows:

1) A cash payment equivalent to Rs. 2.50 for every Rs. 10 shares in Ranjan Ltd.

2) The issue of 90000 equity shares of Rs. 10 each fully paid in Anjan Ltd. having an agreed value of Rs. 15 per share.

3) The issue of such an amount of fully paid 14% debentures in Anjan Ltd. at Rs. 96 per debenture as is sufficient to discharge 12% debentures in Ranjan Ltd. at a premium of 20%. While computing purchase consideration, Anjan Ltd. valued Land, Building and Plant at Rs. 12,00,000, stock Rs. 1,42,000 and Debtors at their face valued subject to a reserve of 5% for doubtful debts. The cost of liquidation of Ranjan Ltd. was Rs. 5,000.

i. Prepare Realization A/c in the books of Ranjan Ltd. 4

ii. Pass Journal Entries in the books of Anjan Ltd. 8

(b) Define ‘internal reconstruction’. Explain various ways in which internal reconstruction of a company can be carried out. 4+8=12

6. (a) The following particulars relate to a limited company which has gone into voluntary liquidation. You are required to prepare the Liquidator’s Final A/c, allowing for his remuneration @2% on the amount realized and 2% on the amount distributed to insecured creditors other than preferential creditors: 12

Preferential Creditors: Rs. 10,000

Insecured Creditors: Rs. 32,000

Debentures: Rs. 10,000

The assets realized the following sums:

Land and Building: Rs. 20,000

Plant and Machinery: Rs. 18,650

Fixtures and Fittings: Rs. 1,000

The liquidation expenses amount: Rs. 1,000

(b) Discuss various modes of winding up of companies in detail.

7. (a) A Ltd. (holding company) acquired 4000 shares of B Ltd. (subsidiary company) as on 1^st January, 2013. Their Balance Sheet as on 31^st December, 2013 stood as follows:

Liabilities	A Ltd. Rs.	B Ltd. Rs.	Assets	A Ltd. Rs.	B Ltd. Rs.
Shares Capital 10000 Equity shares of Rs. 10 each, fully paid 5000 Equity Shares of Rs. 10 each fully paid Profit & Loss A/c Creditors	1,00,000 - 40,000 40,000	- 50,000 10,000 20,000	Fixed Assets Investment: 4000 Equity Shares of B Ltd. at Rs. 12.50 Current Assets	1,00,000 50,000 30,000	60,000 - 20,000
	1,80,000	80,000		1,80,000	80,000

On 1^st January, 2013, the Profit & Loss A/c of B Ltd. showed a loss of Rs. 15,000 which was written off out profits earned in 2013. Prepare a Consolidated Balance Sheet as on 31^st December, 2013. 10

(b) How do you treat the following while preparing the Consolidated Balance Sheet? 5+5=10

i. Capital profit and revenue profit of subsidiary company.

ii. Cost of control, goodwill and capital reserve.

Corporate Accounting Question Papers and Solutions (Dibrugarh University)

Past Exam Question Papers

Solved Question Papers

2010

2011

2012

2013

2014

2015