GOVERNMENT ARTS COLLEGE, UDHAGAMANDALAM

DEARTMENT OF COMMERCE

COURSE AND SEMESTER : IIBCOM I SHIFT IV SEMESTER

SUBJECT : CORPORATE ACCOUNTING

MODEL EXAM : TOTAL MARKS :50

DATE :

SECTION –A (10X1=10)

ANSWER ALL QUESTIONS :

1. Share Application account is a

a. Personal account b. Real account c. Nominal account d. Impersonal account

2. Which section of the companies Act 1956 provides for the issue and redemption of
preference share?

a. Section 80 b. Section 78 c. Section 77A d. Section 77B

3. Interest on debentures is normally payable

a. Half yearly b. Quarterly c. Annually d. Monthly

4. Advance payment of Tax is in the nature of

a. Assets b. Revenue expenses c. Liability d. Prepaid Expenses

5. Accounting standard for Amalgamation is

a. AS -8 b. AS -20 c. AS – 14 d. AS -3

6. Pooling of interests method is used to account for Amalgamations in the nature of

a. Purchase b. sale c. Merger d. none of the above

7.Super profit is the difference between

a.Capital employed and average capital employed b.Average profit and normal profit

c.Current year profit and last year profit d.None of the abov
8.A contributory is

a.Unsecured creditors b.Preferential creditor c.Shareholder d .Debenture holders

9.Profit prior to incorporation belongs to

a.the company b.the vendor c.both the company and the vendor d.none of the above

10.The heading other assets does not includes

a.stationary and stamps b .Interest accured c. Gold d. Silver

SECTION-B (5X3=15)

11. (a)Kailash Ltd.,purchased the business of Mani Brothers for Rs.54,00,000 payable in fully
paid shares of Rs.100 each.What entries will be made in the books of Kailash Ltd,if such issue is
1)at par 2)at a premium of 20% and 3)at a discount of 10%?

Or

(b)Good luck Ltd., issued 1,000 equity shares of Rs.100 each and 1,000 6% debentures of Rs.100
each. The debentures were issued at a discount of 6%.The whole of the issue was underwritten
by Wisdom and Co., for a Commission of 4% on the issue price of shares and 2% on the issue
price of debentures. The public applied for 900 shares and 800 debentures. These were
immediately paid for the underwriters fulfilled their obligations. Pass journal entries.

12 .(a)The following extract from the balance sheet of Vijay Ltd., as on 31 st Dec.2019 is give to
you.(given below)

Share capital

2,00,000 equity shares of Rs.10 each 20,00,000

2,00,000 6% Redeemable preference shares of

Rs,10 each 20,00,000

Capital Reserve 10,00,000

General Reserve 6,00,000

Profit and Loss account 17,00,000

The company exercises its option on redeem the preference shares on 1st Jan 2020,give journal
entries.

(b) Zed Ltd., issued 1,000 9% debentures of Rs.100 each payable,Rs.20 on application and the
balance on allotment.Applications were received for 1,500 debuntures out of which
applications for 900 were allotted fully.Applicants for 400 debuntures were allotted 100
debuntures and the remaining were rejected.All sums due were received.Give journal entries
and also show how these transactions will be rejected in the Balance Sheet of the company.

13. (a) The following ledger balances were extracted from the books of Varun Ltd. As on
31.3.2013.

Land & Building Rs. 2,00,00; 12% Debunture Rs.2,00,000; share capital Rs.10,00,000 (equity
shares of Rs.10 each fully paid up); Plant & Machinary Rs.8,00,000; Goodwill Rs.2,00,000;
Investment in shares of Raja Ltd.Rs.2,00,000;General Reserve Rs.1,95,000;Stock in trade
Rs.1,00,000;Bills receivable Rs.50,000;Debtors Rs.1,50,000;Creditors Rs.1,00,000;bank loan
(unsecured) Rs.1,00,000;provision for tax Rs.50,000;Proposed dividend Rs.55,000.

Prepare the balance sheet of the company as per Revised Schedule V1,Part 1 of the Companies
Act 1956.

(b) From the following particulars of Ganga Ltd., calculate the Managerial remuneration;

Net profit before provision for income tax and

Managerial remuneration but after depreciation 8,70,410

Depreciation provided in the books 3,10,000

Depreciation allowable under schedule XIV 2,60,000

14. (a) The profits of Thilaga Ltd., for the last 5 years were as follows:

1994 18,000

1995 18,000

1996 22,000

1997 25,000

1998 27,000
(b)A firm earned net profits during the last three years as follows:

I Year 36,000

II Year 40,000

III Year 44,000

The capital investment of the firm is Rs.1,00,000

15. (a)A liquidator is entitled to receive remuneration @2% of the asset realized and 3% on the
amount distributed among the unsecured creditors.The assets realized Rs.70,00,000 against
which payment was made as follows:

Liquidation expenses Rs..50,000

Preferential creditors Rs.1,50,000 and

Secured creditors Rs.40,00,000

Unsecured creditors Rs.30,00,000.

Calculate the total remuneration payable to the liquidator.

OR

(b)From the following details ascertain unsecured creditors to be shown in statement of affairs:

Creditors for goods 80,000

Bills payable 8,000

Loan from bank(unsecured) 20,000

Bank over draft 6,000

Loan on Security of Machinary 40,000

Estimated realizable value of Machinary 32,000

Bills discounted 31,000

(20% expected to rank)

Contingent Liabilities 25,000

(10% expected to rank)

 SECTION-C (5X5=25)

ANSWER ALL THE QUESTION:

16. (a)A limited company issued 1,00,000 equity shares of Rs.10 each at a premium of Rs.2 per
share payable as follows:

On application Rs.2

On allotment Rs.5(including premium)

On 1st call Rs.3

On final call Rs.2

All the shares offered were subscribed by the public and cash duly received.Make the necessary
journal and cash book entries.

OR

(b)Bright Ltd,invited application for 10,000 shares of Rs.100 each at a discount of 6% payable as
follows:

On application Rs.30

On allotment Rs.24

On first and final call Rs.40

Application were received for 9,500 shares and all these were acceptd.All moneys due were
received except the final call on 250 shares which were forfeited.150 of the forfeited shares
were reissued at Rs.80 per share as fully paid.

Assuming that all requirements of the law have been complied with,pass jounal entries in the
entries in the books if company and also prepare the balance sheet.

17. (a)The following is the summarized balance sheet of the company.

Liabilities Rs. Assets Rs.

10% Redeemable 1,00,000 Sundry 8,10,000

Preference share: Assets

1,000 share of Rs.100 each Cash at bank 90,000

50,000 Equity shares of 5,00,000

Rs.10 each fully paid

General Reserve 1,00,000

Capital Reserve 50,000

Creditors 1,50,000

_____________ ____________

9,00,000 9,00,000

______________ ____________

For the purpose of redemption of preference shares the company made a fresh issue of 4,500
equity share of Rs.10 each,at a premium of 10%.The preference shares were redeemed at a
premium of 10%

Show journal entries and prepare the balance sheet after redemption.

OR

(b)Sri Ram Ltd.had the following balance sheet as on 1.4.2017.

Liabilities Rs. Assets Rs.

10,000 6% Preference 1,00,000 Buildings 2,00,000

Share of Rs.10 each

30,000 Equity shares of 3,00,000 Plant 2,00,000

Rs.10 each

General reserve 1,00,000 Stock 1,00,000

Profit and loss 80,000 Debtors 1,00,000

Creditors 1,20,000 Cash at bank 1,00,000

___________ ___________

7,00,000 7,00,000
 ____________ ____________

The company decided to redeem its preference shares at 10% premium.For this purpose,it
issued new 5,000 equity shares of Rs.10 each at 10% premium. Show necessary journal entries
and balance sheet.

18. (a)Explain the Features of Revised Schedule VI –Statement of Profit and Loss.

OR

(b)The following balances were extracted from the books of Chandra Limited for the year ended
December 31,2016.

Buildings 6,00,000

Furniture 60,000

Motor vehicles 60,000

Equity shares of companies 4,00,000

Stock in trade at cost 4,00,000

Sundry debtors,unsecured considered goods 2,80,000

Cash at bank 1,72,000

Advance against construction of building 1,30,000

Share capital:10,000 equity shares of Rs.100 each 10,00,000

Sundry creditors 3,50,000

Profit and Loss account(Credit) 20,000

Gross profit 10,00,000

Dividend received on investments 10,000

Salaries and wages 2,20,000

Directors fees 8,000

Electricity charges 25,000

Rates,taxes and insurances 10,000

Auditors fees 15,000

Prepare statement of profit and loss of the company for the year ended December 31,2016,and
a Balance sheet as on the date after considering the following adjustments.

(i)Provide 10% depreciation per annum on fixed assets.

(ii)Stock has been revalued Rs.3,60,000.This has not yet been considered.

(iii)Debts more than 6 month are Rs.80,000.

(iv)Ignore tax provision.

19. (a)Following is the balance sheet of Maruthy Co.Ltd.as on 31 st March 1998.

Liabilities Rs Assets Rs
Rs.60,000 equity shares of 60,00,000 Goodwill at cost 5,00,000

Rs.100 each,fully paid

Capital reserve 2,00,000 Plant and Machinary

General reserve 13,90,000 Less depreciation 17,00,000

Profit & Loss A/C 30,000 Furniture & Fixtures

Sundry creditors 25,70,000 Less depreciation 6,00,000

Provision for taxation 15,00,000 Stock 32,00,000

Proposed dividend 13,20,000 Sundry debtors 20,00,000

Cash 49,10,000

Preliminary expenses 1,00,000

_____________ ____________

1,30,10,000 1,30,10,000

_____________ _____________

The following additional information is provided to you:

(i)The reasonable return on capital employed in the industry in which Maruthy Co.Ltd. is
engaged is 18%.
(ii)The rate of tax is 50%.The balance in provision for taxation account is in respect of profit for
the year ended 31st march 1998.

(iii)The year 1997-98 was a normal year and the prospects for 1998-99 are equally good.

Calculate value of goodwill at four year purchase of super profits of the company.

OR

(b)Discuss the various methods of valuation of shares.

20. (a)Explain the various value based methods of Human Resources Valuation.

OR

(b)The following information relating to Malar Ltd. for the year ended 31.12.96 is provided to
you and you are required to calculate net monetary gain or loss for the year 1996.

Net Monetary assets on 1.1.96 5000

Net Monetary assets on 31.12.96 35,000

Transactions for the year are as given below:

Cash sales 40,000

Credit sales 50,000

Credit purchases 35,000

Wages 10,000

Other operating expenses 5,000

Interest paid on 31.12.96 10,000

General Price Index on 1.1.96=100

General Price Index on 31.12.96=150

Average Index for the year=125

______________________________