ASSAM ROJGAR SAMACHAR

Monday, October 24, 2011

Dibrugarh University - Corporate Accounting 2011

1.       (A) What do you mean by buyback of shares? State the conditions to be fulfilled for buyback of shares. Briefly give guidelines in regulations made by SEBI relating to buyback of shares.
OR
(b) A company issued 5000 debentures of Rs 100 each at par on 1st January, 2003 redeemabl at par on 31st December, 2007. A sinking fund was established for the purpose. It was expected that investments would earn 5% net. Sinking fund tables show that Re 0.180975 invested at the end of each year will amount to Re 1 at the end of 5 years @ 5%. On 31st December, 2007 the investment realized Rs 3,90,000. On that date company’s Bank balance stood at Rs 1,45,600. The debentures were duly redeemed.
Give Journal Entries, Ledger Accounts and assume that the investment were made to the nearest Rs 10.
2.       The following is the Trial Balance of Bee Ltd. as on 31st March, 2007 :
                                                                                                                       
Dr. Balances
Rs
Cr. Balances
Rs
Stock as on 1.4.2006
Purchases
Wages         
Carriage
Furniture
Salaries
Rent
Sundry Trade Expenses
Dividend Paid
Debtors
Plant & Machinery
Cash at Bank
Patents
Bills Receivable
75,000
2,45,000
30,000               
950
17,000               
7,500
4,000
7,050
9,000
27,500
29,000
46,200
4,800
5,000
Purchase Returns
Sales             
Discount     
Profit & Loss A/c
Share Capital
Creditors
General Reserve
Bills Payable
10,000
3,40,000
3,000
15,000
1,00,000
17,500
15,500
7,000

5,08,000

5,08,000
Prepare the profit & Loss A/c for the year ended 31st March, 2007 and a Balance Sheet as on that date after considering the following adjustments :
(i)      Stock as on 31st March, 2007 Rs 88,000
(ii)    Provide for income tax at 50%
(iii)   Depreciate Plant and Machinery at 15%; Furniture at 10% and Patents at 5%
(iv)  On 31st March, 2007 outstanding rent amounted to Rs 800 and salaries Rs 900
(v)    The Board recommends payment of a dividend @ 15% per annum. Transfer the minimum required amount to General Reserve.
(vi)  Provide Rs 510 for doubtful debts
(vii) Provide for managerial remuneration at 10% on profit before tax
(viii)                       Ignore corporate dividend tax.

3.       (a) Explain the various provisions of alteration and capital reduction of Share Capital as given in the Companies Act, 1956 with examples.
(b) The following was the Balance Sheet of XYZ Co. Ltd. before reconstruction :

Liabilities
Rs
Assets
Rs
Issued and Paid-up Capital :
12,000, 7% Preference Share of Rs 50 each
15000 Equity Shares of Rs 50 each
Loan
Sundry Creditors
Other Liabilities


6,00,000

7,50,000
5,73,000
2,07,000
35,000
Building
Plant
Trademarks and Goodwill
Stock
Debtors
Preliminary Expenses
Profit & Loss A/c
4,00,000
2,68,000
3,18,000
4,00,000
3,28,000
11,000
4,40,000

21,65,000

21,65,000

The company is now earning profit but is short of working capital and a scheme of reconstruction had been approved by both classes of shareholders and sanctioned by the court. The scheme is :
(i)      The equity shareholders have agreed that their Rs 50 shares to be reduced to Rs 2.50 per share.
(ii)    They have also agreed to subscribe in cash for three new equity share of Rs 2.50 each for each share held by them.
(iii)   The preference shareholders have agreed to cancel the arrear of dividend and to accept four new 5% preferences shares of Rs 10 each for every preference share they held and each shareholders to buy six new equity shares of Rs 2.50 each fully paid for each preference share.
(iv)  Loan creditors of Rs 1,50,000 have agreed to convert their loan into preference share of Rs 10 each and 12000 new equity shares of Rs 2.50 each.
(v)    The directors have agreed to subscribe in cash for additional 40000 new equity shares of Rs 2.50 fully paid.
(vi)  Of the cash received by issue of new shares Rs 2,00,000 is to be used to reduce the loan due by the company. The amount available is to be applied to write off preliminary expenses, Profit & Loss A/c debit balance and to write off plant and machinery by Rs 35,000. The balance is to be used to write off the value of trademarks and goodwill.
Show the Journal  Entries to put through the scheme and prepare the Balance sheet after reconstruction.

4.       (a) (i) List out the form of business in which a Banking Company may engage as detailed in Section 6 of the Banking Regulations Act.
(ii) Give a pro forma of Profit & Loss A/c of a Banking Company.
Or
(b) The following Trial Balance was extracted from the books of the Life Insurance Corporation as on 31st March, 2007 :


Rs (in ‘000)

Dr.
Cr.
Paid-up Share Capital :


10000000 shares of Rs 10 each

1,00,000
Life Assurance Fund as on 1.4.2006

29,72,300
Bonus to policyholders
31,500

Premium received

1,61,500
Claims paid
1,97,000

Commission paid
9,300

Management expenses
32,300

Mortgages in India
4,92,200

Interest and dividend received

1,12,700
Agent’s balances
9,300

Freehold premises
40,000

Investments
23,05,000

Loans on company’s policies
1,73,600

Cash on deposits
27,000

Cash in hand and Current Account
7,300

Surrenders
7,000

Dividend paid
15,000


33,46,500
33,46,500

        You are required to prepare the Corporation’s Revenue A/c for the year as on 31st March, 2007 and its Balance sheet as on that date after taking the following matter into consideration :
(i)      Claims admitted but not paid Rs 90,00,000
(ii)    Management expenses due – Rs 2,00,000
(iii)   Interest accrued – Rs 1,93,00,000
(iv)  Premium outstanding – Rs 1,00,00,000
(v)    Bonus utilized in reduction of premium for Rs 20,00,000
(vi)  Claims covered under reinsurance Rs 23,00,000

5.       (a) H Ltd. acquired 80000 shares of Rs 10 each in S Ltd. on 1st October, 2006. The summarized Balance sheets of H Ltd. and S Ltd. on 31st March, 2007 were as follows :

Balance Sheet
Liabilities
H Ltd. Rs
S Ltd. Rs
Assets
H Ltd. Rs
S Ltd. Rs
Share Capital in Shares of Rs 10 each
20,00,000
10,00,000
Goodwill
1,00,000

Reserves
1,00,000
1,50,000
Machinery
5,00,000
4,50,000
Profit & Loss A/c
50,000
45,000
Furniture
20,000
40,000
9% Debentures

2,00,000
Shares in S Ltd.
8,80,000

Creditors
4,00,000
2,00,000
9% Debentures in S Ltd.
80,000

Bills Payable
20,000
10,000
Stock
5,20,000
6,50,000



Debtors
1,80,000
2,70,000



Bills Receivable
10,000
15,000



Cash
2,80,000
1,80,000

25,70,000
16,05,000

25,70,000
16,05,000
Bills Receivable of S Ltd. include bills for Rs 8,000 accepted by H Ltd. and creditors of S Ltd. include Rs 20,000 due to H Ltd. An amount of Rs 30,000 was transferred by S Ltd. from the current year’s profits to reserve.
You are required to prepare the Consolidated Balance Sheet as on 31st March, 2007 showing therein how your figures are made up.
Or
(b) What do you understand by goodwill? Under what circumstances does it arise? Explain and illustrate the different methods of calculating goodwill.