2015 (July)
COMMERCE
(General)
Paper: 202
(Corporate Accounting)
Full Marks: 90
Time: 3 hours
The figures in the margin indicate full marks for the questions
1. (a) Give a brief description of the books of accounts and registers which are to be maintained by a company as per provisions of the Indian Companies Act, 1956. 14
Or
Liabilities | Rs. | Assets | Rs. |
9% Redeemable Pref. Shares of Rs. 100 each fully paid-up. Equity Shares of Rs. 5 each fully paid-up General Reserve Profit & Loss A/c Sundry Creditors | 6,50,000 2,25,000 1,00,000 2,60,000 57,500 | Sundry Assets Investments Cash at Bank | 9,50,000 2,75,000 67,500 |
12,92,500 | 12,92,500 |
The Preference Shares are to be redeemed on 1st April 2011 at a premium of 7½%. In order to facilitate redemption the company had decided the following:
- To sell the investments for Rs. 2,60,000.
- To finance a part of the redemption from the company’s fund.
- To issue sufficient equity shares at a premium of Rs. 1 per share to raise the balance of the fund required.
- Minimum bank balance to be retained at Rs. 10,500. The investments were sold, the equity shares were fully subscribed and the preference shares were duly redeemed.
Show the Journal entries and prepare the Balance Sheet after redemption. 8+6=14
2. (a) Fine Products Ltd. was registered with a nominal capital Rs. 5,00,000 divided into shares of Rs. 100 each. The following Trial Balance is extracted from the books on 31st March, 2010:
Dr. Balances | Rs. | Cr. Balances | Rs. |
Building Machinery Closing Stock Purchases (Adjusted) Salaries Director’s fees Rent Depreciation Bad debts Interest accrued on Investment Investments in shares Debenture Interest Loose Tools Advance Tax Sundry Expenses Debtors Cash at Bank | 2,90,000 1,00,000 90,000 2,10,000 60,000 10,000 26,000 20,000 6,000 2,000 1,20,000 28,000 23,000 60,000 18,000 1,25,000 30,000 | Sales Salaries (Outstanding) Provision for Doubtful Debts Share Capital General Reserve Profit & Loss A/c Creditors Provision for Depreciation: Building Machinery 14% Debentures Interest on Debentures Outstanding Interest on Investments Unclaimed Dividend | 5,20,000 2,000 3,000 2,00,000 40,000 25,000 92,000 50,000 55,000 2,00,000 14,000 12,000 5,000 |
12,18,000 | 12,18,000 |
You are required to prepare the Profit and Loss A/c for the year ended 31st March, 2010 and the Balance Sheet as on that date after taking into account the following information:
- Closing Stock is more than Opening Stock by Rs. 30,000.
- Provide for Bad and Doubtful Debts @ 4% on Debtors.
- Make a provision for Income tax @ 50%.
- Depreciation includes Depreciation of Rs. 8,000 on Building and that of Rs. 12,000 on Machinery.
- The Director’s recommended a dividend of 25%.
- Provide Corporate Dividend Tax @ 15%.
- Transfer the required amount to General Reserve. 8+6=14
Or
(b) Describe the provisions of AS – 3 with suitable illustration. 14
3. (a) Explain the following: 6+4+6=16
- Amalgamation in the nature of merger.
- Amalgamation in the nature of purchase.
- Treatment of reserves on amalgamation in the nature of merger and amalgamation in the nature of purchase.
Or
(b) The following are the abridged Balance Sheet of P Ltd. and S Ltd. as on 31st March, 2011:
Liabilities | P. Ltd. (Rs. in’000) | S. Ltd. (Rs. in’000) |
Equity Share Capital (Rs. 10 each) 10% Preference Share Capital (Rs. 100 each) General Reserve Statutory Reserves Profit and Loss A/c 12% Debentures Current Liabilities | 8,000 - 4,610 390 563 - 1,437 | 3,000 1,000 980 125 355 250 990 |
15,000 | 6,700 | |
Assets | P. Ltd. (Rs. in’000) | S. Ltd. (Rs. in’000) |
Fixed Assets Current Assets | 11,000 4,000 | 4,730 1,970 |
15,000 | 6,700 |
On 1st April, 2011 P Ltd. takes over S Ltd. on the following terms:
- P Ltd. will issue 3,50,000 Equity Shares of Rs. 10 each at par to the equity shareholders of S Ltd.
- P Ltd. will issue 11,000, 10% Preference Shares of Rs. 100 each at par to the preference shareholders of S Ltd.
- The debentures of S Ltd. will be converted into an equal number of 12.5% debentures of the same denomination. 8+8=16
You are informed that the Statutory Reserves of S Ltd. are to be maintained for 2 more years. You are required to show that Balance Sheet of P Ltd. immediately after the above mentioned scheme of amalgamation has been implemented assuming that –
- The amalgamation is in the nature of merger;
- The amalgamation is in the nature of purchase.
4. (a) From the following information relating to Adarsh Bank Ltd., prepare Profit & Loss a/c for the year ended, 31st March, 2011. Give necessary schedules: 14
(Rs. in’ 000) | |
Interest/Discounts on – Advances/Bills Income on Investments Interest on balance with RBI Commission, Exchange and Brokerage Profit on sale of investments Interest on Deposits Interest on RBI Borrowings Payment to and Provision for Employees Rent, Taxes and Lighting Printing and Stationery Advertisement and Publicity Depreciation on Banks’ Property Directors’ Fees Allowance and Expenses Auditors’ fees and Expenses Law Charges Postage, Telegram, and Telephone etc. Repair and Maintenance Insurance Balance of Profit and Loss A/c b/f | 31,628 11,810 4,243 2,907 114 31,404 3,362 9,717 955 213 87 292 7 41 22 312 91 915 1,524 |
The following adjustments are to be made:
- Make a provision for Income Tax (including surcharge) @ 51.75%.
- Every year the bank transfers 25% and profit to Statutory Reserve and 5% of profit to Revenue Reserve.
- Dividends amounting to Rs. 2,00,000 for the year ended 31st March, 2011 is proposed by the Board of Directors.
Or
(b) From the following particulars, you are required to prepare the Fire Revenue A/c of the United India Insurance Company Ltd. for the year ending 31st March, 2011: 14
Rs. | |
Claims paid Claims Outstanding on 1st April, 2010 Claims Intimated and Accepted but not paid Premium Received Re-Insurance Premium Commission on Direct Business Claims Intimated but not Accepted on 31st March, 2011 Commission: Re-insurance ceded Re-insurance accepted Expenses of Management Reserve for Unexpired Risk on 1st April, 2010 Additional Reserve for Unexpired Risk on 1st April, 2010 Bonus in Reduction of Premiums | 4,20,000 42,000 65,000 10,60,000 1,80,000 2,20,000 8,000 12,000 6,000 2,80,000 3,90,000 40,000 15,000 |
You are asked by the management to provide for additional reserve for unexpired risk at 1% of the premium in addition to the opening balance.
5. (a) “The holding company and its subsidiaries are considered as a whole economic unit, all the assets and liabilities of various companies being aggregated. The consolidated Balance Sheet must be compiled as if it was the Balance Sheet of an actual company”. Explain and illustrate this statement. 16
Or
(b) The summarized Balance Sheets of A Ltd. and B Ltd. are as follows:
Liabilities | A Ltd. (Rs.) | B Ltd. (Rs.) | Assets | A Ltd. (Rs.) | B Ltd. (Rs.) |
Equity Shares Capital 6% Preference Share General Reserve Profit & Loss A/c Bills Payable Creditors Proposed Dividends | 6,00,000 - 1,60,000 1,30,000 20,000 2,30,000 60,000 | 4,00,000 1,00,000 80,000 1,20,000 25,000 2,85,000 40,000 | Goodwill Fixed Assets Investment Stock Debtors Bills Receivables Cash | - 3,50,000 3,60,000 2,20,000 2,10,000 40,000 20,000 | 20,000 2,50,000 90,000 3,60,000 2,50,000 35,000 45,000 |
12,00,000 | 10,50,000 | 12,00,000 | 10,50,000 |
A Ltd. Purchased interest in B Ltd. by acquiring its 3/4th equity share capital at a premium of 20% on 1st April, 2010, Prepare a Consolidated Balance Sheet on 31st March, 2011. The following further information is to be taken into account:
- Profit and Loss of B Ltd. includes an amount of Rs. 20,000 brought forward from 2009-10.
- Creditors of A Ltd. include an amount of Rs. 12,000 for purchase from B Ltd. which are still unsold. B Ltd. sells goods at 20% above cost.
- B Ltd. remitted a cheque for Rs. 10,000 on 31st March, 2011 which was received by A Ltd. in the month of April, 2011.
6. Write short notes on (any four): 4x4=16
- Redeemable Preference Share.
- Payment of dividend out of capital profit.
- Determination of purchase consideration.
- Forfeiture of share.
- Legal Provisions in respect to redemption of preference share.
- Minority Interest.