2018
(July)
COMMERCE
Paper: 202
(Corporate Accounting)
Full Marks: 90
Time: 3 hours
The figures in the margin indicate full marks for the questions
1) A debenture holder is a creditor of the company.
2) Dividends can be declared except out of profits.
3) External reconstruction means reduction of share capital of a company which is to be reconstructed.
4) General Insurance includes all types of insurance including Life Insurance.
5) In a wholly owned subsidiary, there is no minority interest because all the shares with voting rights are held by the holding company.
(b) Fill in the blanks: 1x5=5
1) Profit on re-issue of forfeited shares is transferred to _______.
2) A company can declare and distribute dividend even if it’s Memorandum and Articles are _______.
3) Reduction of capital is unlawful except when sanctioned by the _______.
4) Banks are _______ institutions.
5) Post-acquisition profits are treated as _______ profits.
2. Write short notes on: 4x5=20
a) Preliminary Expenses.
b) Proposed Dividend.
c) Purchase Consideration.
d) Re-insurance.
e) Cost of control.
3. (a) What do you mean by Buy-back of shares? State the conditions to be fulfilled for buy-back of shares. Briefly give guidelines in regulations made by SEBI relating to buy-back of shares. 2+5+5=12
Or
(b) On 1st April, 2014 X Co. Ltd. issued 1,000, 6% debentures of Rs. 100 each, repayable at par at the end of 4 years. It was decided to create a Sinking Fund for the repayment of the debentures and invest the amount of fund in 6% Government Securities.
Pass Journal entries in the books of X Co. Ltd. for 4 years assuming that the investments were realised for Rs. 70,000 only and the debentures were paid-off at the end of the period.
Annual instalment to provide Rs. 1 at the end of 4 years at 6% compound interest is Rs. 0.228591.
4. (a) Explain the following items: 4x3=12
1) Advance Payment of Tax.
2) Managerial Remuneration.
3) Provisions and Reserves.
Or
(b) XYZ Co. Ltd. was registered with an authorised capital of Rs. 10,00,000 divided into shares of Rs. 10 each of which 40,000 shares have been issued and fully paid up. The following is the Trial Balance extracted on 31st March, 2018:
Debit (Rs.) | Credit (Rs.) | |
Stock (01.04.17) Returns Manufacturing Expenses 10% Bank Loan (Secured) Office Salaries and Expenses Directors Remuneration Land and Building Furniture Debtors and Creditors Cash at Bank Profit & Loss A/c (01.04.17) Share Capital Purchases and Sales Manufacturing Wages Carriage Inward Interest on Bank Loan Auditor’s Fees Preliminary Expenses Plant & Machinery Loose Tools Cash in hand Advance Payment of Tax | 1,86,420 12,680 19,240 17,870 26,250 1,64,210 5,000 1,05,400 96,860 7,18,210 1,09,740 4,910 4,500 8,600 6,000 1,28,400 12,500 19,530 84,290 | 9,850 50,000 62,220 38,640 4,00,000 11,69,900 |
17,30,610 | 17,30,610 |
You are required to prepare Profit & Loss Account for the year ended 31st March, 2018 and a Balance Sheet as on that date after taking into consideration the following adjustments:
1) On 31st March, 2018, Stock was valued at Rs. 1,24,840.
2) Provide for interest on Bank Loan for 6 months.
3) Depreciation Plant & Machinery @ 15% p.a. and Office furniture @ 10% p.a.
4) Write-off 1/3rd of Preliminary Expenses.
5) Ignore Corporate Dividend Tax. 7+5=12
5. (a) X Ltd. and Y Ltd. decide to amalgamate and a new Company named XY Ltd. is formed to take over both the Companies as on 31st March, 2018. The following are the ledger balances of the Companies as on that date:
Credit Balances | X Ltd. (Rs.) | Y Ltd. (Rs.) | Debit Balances | X Ltd. (Rs.) | Y Ltd. (Rs.) |
Share Capital: Shares of Rs. 10 each fully paid up Reserve Fund Profit & Loss A/c Dividend Equilisation Workmen Compensation Fund Bank Overdraft Sundry Creditors Bills Payable | 5,00,000 2,00,000 30,000 - 20,000 - 90,000 50,000 | 3,00,000 1,50,000 50,000 1,00,000 - 50,000 1,10,000 30,000 | Goodwill Land & Building Plant & Machinery Patents & Trade Mark Stocks Sundry Debtors Bills Receivable Cash at Bank | 1,00,000 2,50,000 2,00,000 2,00,000 90,000 - 50,000 | 80,000 1,90,000 2,53,000 57,500 1,50,000 40,000 20,000 2,500 |
8,90,000 | 7,90,000 | 8,90,000 | 7,90,000 |
Calculate the Purchase Consideration. Also pass Journal Entries and prepare the amalgamated Balance Sheet of XY Ltd. assuming that amalgamation is done in the nature of purchase. 2+5+5=12
Or
(b) Explain the various provisions of alteration of Share Capital as per the Companies Act, 2013 with examples. 12
6. (a) Explain: (any three) 4x3=12
1) Fire Insurance.
2) Re-insurance.
3) Double Insurance.
4) General Insurance.
Or
(b) The following figures have been obtained from the books of Moon Light Bank Ltd. for the year ended 31st March, 2018:
Rs. | |
Interest and discount earned Commission and exchange earned Interest paid Salaries and Wages Director’s Fees Rent and Taxes Postage and Telephone Expenses Profit on sale of investments Rent received Depreciation on Bank’s property Stationary Auditor’s Fees | 38,00,000 1,95,000 20,00,000 2,10,000 35,000 70,000 61,000 2,40,000 62,000 31,000 60,000 8,000 |
Additional information:
1) The Profit & Loss Account had a balance of Rs. 10,00,000 on 1st April, 2017.
2) An advance of Rs. 12,00,000 has become doubtful and it is expected that only 50% of the amount due can be recovered from security.
3) A dividend of 10% is proposed on subscribed capital of Rs. 10,00,000.
Prepare Profits & Loss A/c of Moon Light Bank Ltd. for the year ended 31st March, 2018. 12
7. (a) Give the legal definition of a holding company and its subsidiary company. Mention any four advantages and four disadvantages of a holding company. 4+4+4=12
Or
(b) A Ltd. (Holding Co.) acquired 4,000 shares of B Ltd. (Subsidiary Co.) as on 1st April, 2017. Their Ledger account balances as on 31st March, 2018 stood as follows:
Credit Balances | A Ltd. (Rs.) | B Ltd. (Rs.) | Debit Balances | A Ltd. (Rs.) | B Ltd. (Rs.) |
Share Capital: 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: 40,000 shares in 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 1st April, 2017, the Profit & Loss A/c of B Ltd. showed a Loss of Rs. 15,000 which was written off out of profits earned in 2017-18.
Prepare a consolidated Balance Sheet as on 31st March, 2018.
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