2017
(August)
COMMERCE
Paper: 202
(Corporate Accounting)
Full Marks: 90
Time: 3 hours
The figures in the margin indicate full marks for the questions
1. (a) State the following statements whether ‘True’ or ‘False’: 1x5=5
1) The director of the company must be a shareholder.
2) Preliminary Expenses are of revenue nature.
3) Reduction of Share Capital is unlawful except when sanctioned by the court.
4) Banking companies are governed by the “Banking Regular Act, 1942”.
5) The meaning of ‘Cost of Capital’ and ‘Goodwill’ is the same.
(b) Fill in the blanks: 1x5=5
1) The portion of the authorised capital which can be called up only on the liquidation of the company is called _______ capital.
2) Under the Income-Tax _______ companies are required to pay advance income tax on their expected profits.
3) Accounting Standard _______ relates to Accounting for Amalgamation.
4) Banks in India are under the general supervision of the _______.
5) A company controlled by a Holding Company is termed as a _______ company.
2. Write short notes on: 4x5=20
a) Security Premium.
b) Interim Dividend.
c) External Reconstruction.
d) Non-banking Assets.
e) Minority Interest.
3. (a) Give a brief description of the books of accounts and registers which are to be maintained by a company as per the provisions of the Indian Companies Act. 12
Or
(b) Bharalu Co. Ltd. issued 10,000 shares of Rs. 100 each at a premium of 10% payable as under:
Rs. 30 Rs. 60 Rs. 20 | On Application On Allotment (including premium) On Call |
Bikash holding 700 shares failed to pay the call money. The company forfeited his shares and re-issued them to Jatin as fully paid up at Rs. 90 per share.
Give Journal Entries to record the above transactions and show the Balance Sheet of the company. 8+4=12
4. (a) Jagdamba Traders Ltd. was registered with an authorised capital of Rs. 1,00,000 divided into 10,000 ordinary shares of Rs. 5 each and 50,000 preference shares of Rs. 1 each. From the following Trial Balance, prepare statement of Profit and Loss and the Balance sheet of the company as on 31st March, 2016:
Debit | Rs. | Credit | Rs. |
Calls-in-Arrear Cash in Hand Cash at Bank Debtors Machinery Land & Building Stock (1.4.2015) Purchases Wages Patents Bills Receivable Carriage Inwards Salaries Trading Charges Advertising Repairs Directors Fees Preference Dividend Ordinary Dividend | 4,000 290 1,310 4,000 18,000 30,000 10,000 25,000 17,000 5,000 4,000 450 1,500 800 1,000 450 820 2,400 1,680 | Ordinary Share Capital Preference Share Capital Creditors Sales 10% Debentures Bills Payable Provision for Bad Debts (1.4.2015) Reserve Fund Profit & Loss A/c (1.4.2015) | 32,000 40,000 2,500 45,000 4,000 700 160 3,000 340 |
1,27,700 | 1,27,700 |
Necessary Adjustments:
1) Depreciate Machinery by 4% and Land & Building by 5%.
2) Reserve for Bad Debts is to be created at 5% on debtors.
3) Interest on debentures is to be allowed for the year.
4) Ignore Corporate Dividend Tax.
5) Closing Stock as on 31st March, 2016 was Rs. 22,000. 6+6=12
Or
(b) Explain the following items: 4x3=12
1) Corporate Dividend Tax.
2) Final Dividend.
3) Provision for Taxation.
5. (a) Distinguish between the following: 6+6=12
1) Amalgamation in the nature of Merger and amalgamation in the nature of Purchase.
2) Pooling of interest method and purchase method of amalgamation.
Or
(b) X Co. Ltd. had the following ledger balances as on 31st March, 2016.
Debit balances | Rs. | Credit balances | Rs. |
Issued and paid up capital: 8,000 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 & Building Pant & 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 reconstruction scheme was adopted:
1) Without offering the number of shares in issued and paid up capital, the face value and paid-up value of each share was to be reduced to Rs. 50.
2) The existing debentures be converted into 400, 7 and half % debentures of Rs. 1,000 each, fully paid.
3) The assets are to be revalued as under:
Land and Building Rs. 3,28,000.
Plant & Machinery Rs. 7,20,000.
Stock Rs. 1,78,000.
Sundry Debtors subject to a Bad Debts provision of Rs. 20,000
4) Goodwill, Preliminary Expenses and Debit balance in Profit & Loss Account should be completely written off.
Give Journal Entries to implement the above scheme and prepare the Balance Sheet after the re-construction scheme is carried through. 7+5=12
6. (a) Explain (any three): 4x3=12
1) Rebate on Bills Discounted.
2) Statutory Reserve.
3) Banking Regulation Act, 1949.
4) Slip System of Posting.
Or
(b) From the following particulars, you are required to prepare the Fire Insurance Revenue A/c of Jai Bharat Insurance Co. Ltd. for the year ended 31st March, 2016:
Rs. | |
Claims paid Claims Outstanding as on 01-04-2015 Claims intimated and accepted but not paid yet Premiums Received Re-insurance Premium Commission on Direct Business Claims intimated but not accepted on 31-03-2016 Commission on: Re-insurance ceded Re-insurance accepted Expenses on management Reserve for unexpired risks as on 01.04.2015 Additional Reserve for unexpired risks on 01.04.2015 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 4,000 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. 12
7. (a) How do you treat the following while preparing the consolidated Balance Sheet:
1) Capital Profit and Revenue Profit of Subsidiary Co.
2) Cost of Control, Goodwill and Capital Reserve. 6+6=12
Or
(b) The net profit of a company after providing for taxation for the past five years are:
Rs. 40,000; Rs. 42,000; Rs. 45,000; Rs. 46,000 and Rs. 47,000. The capital employed in the business is Rs. 4,00,000 on which a reasonable rate of return of 10% is expected. It is expected that the company will be able to maintain its super profit for the next five years.
Calculate the value of goodwill of the business:
a) On the basis of an annuity of super profits taking the present value of an annuity of rupee one for five years at 10% interest is Rs. 3.78.
b) On the basis of capitalizing the excess of the annual average distributable profits over the reasonable return on capital employed. 12
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