Corporate Accounting Question Paper May' 2016, Dibrugarh University B.Com 2nd/4th Sem

Dibrugarh University Corporate Accounting Question Papers
Corporate Accounting Question Paper 2016 (May)
COMMERCE (General/Speciality)
Course: 203 (Corporate Accounting)
The figures in the margin indicate full marks for the questions
Full Marks: 80
Pass Marks: 32
Time: 3 hours

1. (a) Fill in the blanks: 1x4=4

i. Out of the face value of shares, at least ____ is payable with application under Section 39 of the Companies Act, 2013.

ii. Capital Reserve is not used for issue of ____ shares.

iii. The dividend which is declared in between two annual general meetings of a company is called ____ dividend.

iv. Section ____ of the Companies Act, 2013 defines a subsidiary company.

(b) State the following statements whether ‘True’ or ‘False’: 1x4=4

i. Shares can be converted into debentures.

ii. Accounting Standard – 14 relates to Accounting for Amalgamation.

iii. Under Income-tax Act, 1961, companies are required to pay advance income tax on their expected profits.

iv. If the holding company has 100% shares in a subsidiary company, then only assets of the subsidiary company belongs to the holding company.

2. Write brief notes on any four of the following: 4x4=16

a) Securities Premium Reserve A/c.

b) Sinking Fund.

c) Advance Payment of Tax.

d) Reduction of share capital.

e) Consolidated Balance Sheet.

3. (a) A company invited the public to subscribe for 100000 equity shares of Rs. 10 each at a premium of Rs. 1 per share payable on allotment. Payments were to be made as follows:

On application – Rs. 3 per share.

On allotment – Rs. 3 per share.

On first call – Rs. 3 per share.

On final call – Rs. 2 per share.

Applications were received for 130000 shares. Applications for 20000 shares were rejected and allotment was made proportionately to the remaining applicants. Both the calls were made and all the money received expect the final call on 3000 shares which were forfeited after due notice. Later on these shares were reissued as fully paid at Rs. 8.50 per share. Pass Journal Entries in the books of the company. 14

(b) Discuss the provisions of law with regard to redemption of redeemable preference shares as laid down in Section 55 of the Companies Act, 2013. 14

4. (a) Draw a company Balance Sheet as per Schedule VI of the Companies Act, 2013. Write a short note on International Financial Reporting Standard – 2, 3 and 5 (IFRS – 2, 3 and 5). 7+7=14

(b) Following is the Trial Balance of Luit Co. Ltd. as on 31^st March, 2016:

	Dr. Balances Rs.	Cr. Balances Rs.
Stock, 1^st April, 2015 Sales Purchases Wages Discount Furniture and Fittings Salaries Rent Sundry Expenses Surplus A/c, 1^st April, 2015 Dividend paid Share Capital Debtors and Creditors Plant and Machinery Cash at Bank Reserve fund Patents and Trade Mark	75,000 2,45,000 50,000 17,000 7,500 4,950 7,050 9,000 37,500 29,000 16,200 4,830	3,50,000 5,000 15,030 1,00,000 17,500 15,500
	5,03,030	5,03,030

Prepare the Statement of Profit and Loss for the year ended 31^st March, 2016 and Balance sheet as on that date. Take into consideration of the following adjustments: 7+7=14

i. Stock on 31^st March, 2016 was valued at Rs. 82,000.

ii. Depreciation on fixed assets @ 10% p.a.

iii. Make a provision for income tax @ 50% p.a.

iv. Ignore corporate dividend tax.

5. (a) What do you mean by amalgamation? What are its features? Discuss ‘pooling of interest method’ of amalgamation. 2+4+8=14

(b) The ledger balances of HiFi Ltd. as on 31^st March, 2016 are as follows:

Cr. Balances	Amount (Rs.)	Dr. Balances	Amount (Rs.)
Share Capital: Authorized Capital: 50000 Preference shares of Rs. 10 each 50000 Equity shares of Rs. 10 each Issued and Paid-up: 25000 Preference shares of Rs. 10 each 25000 Equity shares of Rs. 10 each Current Liabilities: Sundry Creditors Bank Overdraft	5,00,000 5,00,000	Goodwill Leasehold Premises Plant and Machinery Patents Stock Debtors Cash Surplus A/c (negative balance)	60,000 1,07,000 60,000 1,73,900 34,000 56,000 100 1,25,000
	2,50,000 2,50,000 40,000 36,000
	5,76,000		5,76,000

The company proved unsuccessful and resolutions were passed to carry out the following scheme of reconstruction by reduction of capital:

i. That the Preference Shares be converted to an equal number of fully paid shares of Rs. 5 each.

ii. That the Equity shares be reduced to an equal number of fully paid shares of Rs. 2.50 each.

iii. That the amount so available be utilized towards wiping out losses and reduction of assets as follows: Goodwill and Surplus A/c (negative balance) to be written off entirely; Rs. 27,000 to be written off from Leasehold Premises, Rs. 14,000 to be written off from Stock; Rs. 6,000 to be provided for Doubtful debts, 20% should be written off from Plant and Machinery and the balance be written off from patents. Make Journal Entries in the books of the company and prepare Balance Sheet giving effect to the above scheme.

6. (a) Following are the Balance Sheets of H Ltd. and its subsidiary company S Ltd. as on 31^st March, 2014:

Liabilities	H Ltd Rs.	S Ltd. Rs.	Assets	H Ltd. Rs.	S Ltd. Rs.
Share Capital: Shares of Rs. 10 each fully paid-up General Reserve Profit & Loss A/c Creditors	6,00,000 1,50,000 70,000 1,30,000	2,00,000 70,000 50,000 1,00,000	Machinery Furniture Investment: 70% Shares in S Ltd. at cost Stock Debtors Cash at Bank Preliminary Expenses	3,00,000 70,000 2,60,000 1,75,000 95,000 50,000 -	1,00,000 45,000 - 1,89,000 70,000 10,000 6,000
	9,50,000	4,20,000		9,50,000	4,20,000

H Ltd. acquired the shares of S Ltd. as on 30^th June, 2013. On 1^st April, 2013, the balance of General Reserve and Profit & Loss A/c of S. Ltd. stood at Rs. 60,000 and Rs. 20,000 respectively. No part of preliminary expenses was written off during the year ended on 31^st March, 2014. Prepare the Consolidated Balance Sheet of H. Ltd. and its subsidiary company S Ltd. as at 31^st March, 2014. 14

(b) (i) State the distinction between Holding Company and Subsidiary Company.

(ii) State three merits and three demerits of holding company. 8+6=14

(OLD COURSE)

Full Marks: 80

Pass Marks: 32

1. (a) State whether the following statements are ‘True’ or ‘False’: 1x4=4

i. A debenture holder is an owner of the company.

ii. Out of the face value of the shares, at least 20% is payable with application.

iii. Reduction of share capital is unlawful except when sanctioned by the court.

iv. Insolvency is not a necessary condition for liquidation of a company.

(b) Fill in the blanks: 1x4=4

i. Preference shares can be redeemed if they are ____.

ii. The portion of the authorized capital which can be called up only on the liquidation of the company is called ____ capital.

iii. Consolidated Financial Statements are prepared as per Accounting Standard ____.

iv. Accounting Standard ____ relates to Accounting for Amalgamation.

2. Write short notes on any four of the following: 4x4=16

a) Preliminary Expenses.

b) Sinking Fund.

c) Minority Interest.

d) Amalgamation in the nature of purchase.

e) Winding-up of a company.

3. (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. 7+5=12

(b) The Balance Sheet of J. K. Ltd. as on 31^st March, 2016 is given below:

Liabilities	Amount (Rs.)	Assets	Amount (Rs.)
9% Redeemable Preference 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 1^st April, 2016 at a premium of 7 ½ %. In order to facilitate redemption, the company had decided the following:

a) To sell the investments for Rs. 2,60,000.

b) To finance a part of the redemption from the company’s Reserve Fund.

c) To issue sufficient equity shares at a premium of Rs. 1 per share to raise the balance of the fund required.

d) 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 dully redeemed.

Show the Journal Entries and prepare the balance sheet after redemption. 7+5=12

4. (a) (i) What do you mean by ‘buyback of shares’? State the legal provisions relating to buyback of shares. 2+3=5

(ii) Mention any three advantages and three disadvantages of buyback of shares. 3+3=6

(b) XYZ Co. Ltd. issued 500, 6% debentures of Rs. 100 each on 1^st January, 2012, repayable at a premium of 5% at the end of 3 years. In order to ensure repayment, a sinking fund was created at 5% p.a. at compound interest. Investment realized Rs. 33,000 on 31^st December, 2014 and the debentures were paid of on that date. Sinking Fund Table shows that Rs. 0.317208 amounts to Rs. 1 in 3 years at 5% compound interest. Pass the necessary Journal Entries. 11

5. (a) X Ltd. and Y Ltd. decided to amalgamate and a new company XY Ltd. is formed to take over both the companies as on 31^st March, 2016. The following are the Balance Sheets of the companies as on that date:

Liabilities	X Ltd. Rs.	Y Ltd. Rs.	Assets	X Ltd. Rs.	Y Ltd. Rs.
Share Capita: Shares of Rs. 10 each fully paid Reserve fund Profit & Loss A/c Dividend Equalization Fund Workmen Compensation fund Bank Overdraft Sundry Creditors Bills Payable	5,00,000 2,00,000 30,000 - 20,000 - 1,00,000 50,000	3,00,000 1,50,000 50,000 1,00,000 - 50,000 1,20,000 30,000	Goodwill Land and Buildings Plant and Machinery Patents and Trade Mark Stock Sundry Debtors Bills Receivable Cash at Bank	1,00,000 2,50,000 2,00,000 - 2,00,000 1,00,000 - 50,000	80,000 1,90,000 2,55,000 52,500 1,50,000 50,000 20,000 2,500
	9,00,000	8,00,000		9,00,000	8,00,000

Show how the amount payable to each company is arrived at the prepare the amalgamated Balance Sheet of XY Ltd. assuming amalgamation is done in the nature of purchase. 5+6=11

(b) (i) Distinguish between Amalgamation and Absorption. 4

(ii) What do you mean by internal reconstruction of a company? Explain its scope. 3+4=7

6. (a) (i) Who are the preferential creditors? 3

(ii) XYZ Ltd. went into voluntary liquidation on 31^st March, 2016. The position of the company on that date as follows:

	Rs.
Share Capita: 5000 Equity shares of Rs. 10 each, Rs. 8 per share called up Unsecured Creditors: Preferential Non-preferential Secured creditors (secured on Plant and Machinery) Cash in hand	40,000 5,000 25,000 15,000 1,000

Plant and Machinery finally realized Rs. 10,000 and other assets realized Rs. 10,000. The liquidation expenses amounted to Rs. 500 and the liquidator was entitled to a remuneration of 5% on the amount realized excepting cash in hand and 2% on the amount distributed to unsecured creditors. Prepare the Liquidator’s Final Statement Account showing the percentage of distribution finally made to unsecured creditors. 8

(b) What do you understand by the ‘Liquidator’s Final Statement of Account? Give a proforma of such an account with imaginary figures. 4+7=11

7 (a) From the following Balance Sheets of H. Ltd. and its subsidiary company S Ltd. drawn up on 31^st March, 2016, prepare a Consolidated Balance Sheet as on that date. On the date of acquisition of the shares, the General reserve of S Ltd. amounted to Rs. 20,000 and the Surplus A/c balance amounted to Rs. 40,000 (Cr.): 11

Liabilities	H Ltd. (Rs.)	S Ltd. (Rs.)	Assets	H Ltd.(Rs.)	S Ltd. (Rs.)
Share Capita: Shares of Rs. 10 each fully paid General Reserve Surplus A/c Sundry Creditors	10,00,000 1,00,000 1,50,000 1,50,000	4,00,000 20,000 60,000 40,000	Freehold Property (at cost) Plant & Machinery (at cost less depreciation) Investment: 40000 shares in S Ltd. at cost. Stock Sundry Debtors Bank Balance	2,00,000 2,50,000 4,00,000 1,50,000 2,00,000 2,00,000	- 1,20,000 - 2,00,000 1,00,000 1,00,000
	14,00,000	5,20,000		14,00,000	5,20,000

(b) Describe the documents in respect of each subsidiary company to be attached to the Balance Sheet of the holding company under Section 212 of the Indian Companies Act, 1956. 11

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