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PSG COLLEGE OF ARTS & SCIENCE
(AUTONOMOUS)
BCom DEGREE EXAMINATION DECEMBER 2019
(Fifth Semester)
Common to Branches - COMMERCE / COMMERCE WITH CA /
e-COMMERCE / COMMERCE (AF) / COMMERCE (RM) / COMMERCE (FT) /
COMMERCE (FS) / COMMERCE (BPS) & COMMERCE (B&I)
CORPORATE ACCOUNTING - II
Time : Three Hours Maximum : 75 Marks
SECTION-A (20 Marks)
Answer ALL questions
ALL questions carry EQUAL marks ( 1 0 x 2 = 20)
1 What is meant by ‘Intrinsic Value’?
2 Give the meaning of Absorption.
3 What do you understand by external reconstruction?
4 What do you mean by alteration of share capital?
5 Write down rebate on bills discounted.
6 What do you mean by operating expenses?
7 State the concept of re-insurance ceded.
8 Sketch out the any three importance of marine insurance.
9 What do you understand by cost of Control?
10 Write a shorf note on Revenue Profit.
SECTION - B (25 Marks)
Answer ALL Questions
ALL Questions Carry EQUAL Marks ( 5 x 5 = 25)
11 a Raman Ltd., agrees to purchase the business of Krishnan Ltd., on the
following terms:
a. For each of the 10,000 shares of Rs. 10 each in Krishnan Ltd. 2 shares
in Raman Ltd. of Rs.10 each will be issued at an agreed value of Rs. 12 per
share. In addition, Rs.4 per share cash also will be paid.
b. 8% debentures worth Rs.80,000 will be issued to settle the Rs.60,000
9% debentures in Krishnan Ltd.
e. Rs. 10,000 will be paid towards expenses of winding up.
Calculate the purchase consideration.
OR
b Briefly explain the various methods of purchase consideration.
12 a Marshall Ltd. has share capital of Rs.5,00,000 divided into 5,000 shares of
Rs.100 cash fully paid. Show the entries under each of the following conditions:
(i) When Marshall Ltd resolves to sub - divide the shares into 50,000
shares of Rs. 10 each fully paid.
(ii) When Marshall Ltd resolves to convert its 5,000 shares ofRs. 100
each into Rs.5,00,000 worth of stock.
OR
b X Co.Ltd has the following shares as a part of its share capital.
10.000 8% preference shares of Rs.100 each fully paid.
50.000 equity shares of Rs.5 each fully paid
20.000 equity shares of Rs. 10 each, Rs.8 called up and paid up.
The company has decided to alter the share capital as follows:
(i) To sub divide the preference shares into shares of Rs.10 each
(ii) To consolidate the equity shares of Rs.5 each into shares of Rs.10 each.
(iii) To convert the partly paid up equity shares into fully paid up shares of
Rs.8 each, with necessary legal sanctions.
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13 a st
As on 31 December 1985, the books of the Hercules bank, include
among others, the following balances.
Rs.
Rebate on bills discounted (1.1.1985) 3.20.000
Discount received 46,00,000
Bills discounted and purchased 3.15.47.000
Thoughout 195, the bank’s rate for discounting has been 18%.
On investigation and analysis, the average due date for the bills discounted
and purchased is calculate as 14th February, 1986.
Show the calculation of the amount to be credited to the banks Profit and
Loss a/c under discount earned for the year 1985. Show also the journal
entries required to adjust the above mentioned accounts.
OR
I St
b
Date of bill 1998 Term of bill Discounted Amount of bill
(months) @ % p.a. Rs.
(i) January, 17 4 17 7,30,000
(ii) February, 7 3 18 14,60,000
(iii) March, 9 3 17.5 3,64,000

the necessary journal entry for the rebate.

14 a A Life Assurance Company prepared its Revenue A/c for the year ended
31-3-20)7 and ascertained its Life Assurance fund to be Rs.28,35,000. It
was found later that the following has been omitted from the accounts:
Rs.
Interest accrues on investment 39,000
Income tax liable to be deducted on the above 10,500
Outstanding premiums 32,800
Bonus utilized for reduction of premium 6,750
Cams intimated but not admitted 17,400
Claims covered under reinsurance 6,500
What is the true life assurance fund?
OR
b A Life Insurance Company gets its valuation made once in every two years. Its
Life Assurance fund on 31-03-2017 amounted to Rs.63,84,000 before
providing Rs.64,000 for the shareholders’ dividend for the year 2016-17. Its
actuarial valuation due on 31-03-2017 disclosed a net liability of Rs.60,80,000
under assurance annuity contracts. An interim bonus of Rs.80,000 was paid to
the policy holders during the two years ending 31-03-2017. Prepare a
statement showing the amount now available as bonus to policyholders.
15 a On 1-7-01 X Ltd. acquired 60% shares of Y Ltd. (with a total capital of
Rs.5,00,000) for Rs.3,80,000. The Balance sheet of Y Ltd., showed P&L
a/c balance on 1-1-01. Rs.1,20,000 and profit for the year 2001 Rs.1,00,000.
Calculate the value of goodwill or Capital Reserve.
OR
b The Balance sheets of C Ltd. and D Ltd, as at 31st December, 1986 are as follows:
C Ltd D Ltd C Ltd D Ltd
Rs. Rs. Rs. Rs.
Share Capital (in Sundry Assets 1,32,500 1,38,200
shares of Rs.10 each) 2,00,000 1,00,000 Goodwill 20,000
General Reserve 18,000 20,000 Shares in 1,40,000
Profit and Loss a/c 24,500 23,000 D Ltd. at cost
Creditors 30,000 15,200
2,72,500 1,58,200 2,72,500 1.58.200
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15 b Cent...
In the case of ‘D’ Ltd., profit for the year ended 31st December 1986 is
Rs. 12,000 and transfer to reserve is Rs.5,000. The holding of C Ltd. in D Ltd. is
90% acquired on 30th June 1986.
Draft a consolidated Balance sheet of ‘C’ Ltd. and its subsidiary.
SECTION - C (30 Marks!
Answer any THREE Questions
ALL Questions Carry EQUAL Marks (3 x 10 = 30)
16 The following is the Balance sheet f X Ltd., as on 31.3.2008.
Liabilities AssetsRs. Rs.
Share Capital: Land & buildings 10,00,000
2,00,000 shares of Rs.10 each 2,00,000 Plant & Machinery 15,00,000
General Reserve 2,50,000 Furniture 25,000
Dividend Equalisation Reserve 2,00,000 Stock 6,00,000
Profit and Loss a/c 51,000 Work-in-Progress 3,00,000
12% Debentures 10,00,000 Sundry Debtors 2,50,000
Sundry Creditors 3,00,000 Cash at Bank 1,26,000
38,01,000 38,01,000
The company was absorbed by A Ltd., on the above date. The
consideration for the absorption is the discharge of the debentures at a
premium of 5% taking over the liability in respect of sundry creditors and
a payment^of Rs.7 in cash and one share of Rs.5 in A Ltd. at the market
value of Rs.8 per share for every share in X Ltd. The cost of Liquidation
of Rs. 15,000 is to be met by the purchasing company.
Close the books of X Ltd and pass journal entries in the books of A Ltd.
17 Differentiate internal reconstruction and external reconstruction.
18 The following figures are extracted from the books of Bheema Bank Ltd
as on 31-12-2016.
Rs.
Interest and discount received 36,95,738
Commission, exchange and brokerage 2,00,000
Director’s fees and allowances 55,000
Postage and Telegrams 62,313
Stationery 17,625
Preliminary Expense 15,000
Interest paid on Deposits 20,32,542
Rent received 55,000
Salaries and allowances 1,75,000
Rent and taxes paid 87,973
Profit on sale of investments 2,00,000
Depreciation on building 27,375
Audit fees 5,000
Additional information:
i) A customer to whom a sum of Rs. 10,00,000 has been advanced has
become insolvent. It is expected that only 50% can be recovered
from his private estate.
ii) For the remaining debts, a provision of Rs. 1,50,000 was necessary.
iii) Rebate on bills discounted as on 31-12-2015 Rs. 12,000 and on
31-12-2016 Rs.16,000.
iv) Provide Rs.6,50,000 for taxation.
v) Write off preliminary expenses.
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19 From the following data of a life insurance company, prepare Revenue a/c
and Balance sheet as on 31-3-2017. , :
Rs.fOOO) Rs.fOOO)
Claims by death 16,890 Outstanding-interest on advances (31-3-17) 1,944
Agent’s salary & Allowance 6,420 Bonus paid with claims 2,700
Surrender values paid 2,810 Endowment assurance matured 24,415
Actuarial expenses 1,520 Annuities paid 1,350
Premiums 94,836 Interest revenue 19,060
Commission to agents 8,900 Rent, Rates & Taxes 5,475
Salaries 13,500 General charges 1,860
Medical fees 1,200 Fees Received 172
Travelling expenses 1,800 Bonus paid in cash 2,825
Directors’ fees 900 Advertisement 726
Agents balances 7501 Consideration for annuities granted 12,853
Claim expenses 1,432 Printing & stationery 650
Premium outstanding (1-4-16) 2,134 Claims O/S (1-4-2016) 2,376
Premium outstanding (31-4-17) 3,143 Claims O/S (31-3-2017) 3,735
Investments 1,46,700 Loans on policies 38,300
Share Capital 2,00,000 Loans on mortgage 2,90,560
Sundry Creditors 9,200 Freehold premises 1,22,600
Life Assuranc^ (1 -4-2016) 3,53,672 Furniture & fittings 64,100
Reserve fund * 1,46,000 Cash on hand & deposits 76,300

20 From the following balance sheet relating to H Ltd. and S Ltd. Prepare a
consolidated Balance sheet.
Ebalance Sheet as on 31.12.1992
Liabilities H Ltd S Ltd Assets H Ltd S Ltd
Rs. Rs. Rs. Rs.
Share Capital: Sundry Fixed Assets 8,00,000 1,20,000
Shares of Rs.10 each) 10,00,000 2,00,000 Stock 6,10,000 2.40.000
Profit and Loss a/c 4.00. 0001,20,000 Debtors 1.30.000 1.70.000
Reserves 1.00. 000 60,000 Bills Receivable 10,000
Creditors 2,00,000 1,20,000 Shares in
Bills Payable 30,000 S Ltd. at cost 1.50.000
17,00,000 5,30,000 (1,500 shares) 17,00,000 5,30,000
a) All profits of s Ltd. have )een earned after the shares were acquired by
H Ltd. But there was already a reserve of Rs.60,000 on that date.
b) All the bills payable of S Ltd. were accepted in favour of H Ltd.
c) The Stock of H Ltd. includes Rs.50,000 purchased from S Ltd. The
profit added was 25% on cost.
z-z-z END