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Sunday, February 23, 2014

Dibrugarh University - Corporate Accounting (May' 2013)

2013 (May)

Commerce (General/Speciality)

Course: 203

Full Marks: 80

Time: 3 Hours


1.       (a) state true or false
(i)      Out of face value of shares, at least 10% is payable with application.
(ii)    A debenture holder is an owner of the company.
(iii)   Under net payment method purchase consideration is calculated by adding the various payments made by the purchasing company.
(iv)  Insolvency is a necessary condition for liquidation of a company.

(b) State the correct answer:
(i) Preference shareholder are
(a) Creditors of a company
(b) owner of the company
(c) customers of the company

(ii) Debentures are show in the Balance sheet at
(a)    Face value
(b)   Discount
(c)    Premium
(iii) Accumulated losses to the vendor company should be transferred to the
(a)    Profit and Loss Account
(b)   Profit and Loss Appropriation Account
(c)    Equity shareholder Account

(v)    A contributory is a
(a)    Debenture holder
(b)   Share holder creditor

2.       Answer the following:
(a)    Explain how would you deal with---
(i)      Shares forfeited but not reissued;
(ii)    Shares forfeited and reissued;

(b)   Distinguish between ‘preacquisition profit’ and ‘postacquisition profit’ of a company.
(c)    Explain briefly the modes of winding up of a company.
(d)   State the order in which ordinarily made by a liquidator to satisfy the various claims in case of voluntary liquidation of a company.

3.       (a) A limited company issued 6% 10000 debentures of Rs. 100 each at discount of 5 per cent, repayable after 5 years at a premium of 10 per cent. Show journal Entries in the books of the company recording the above transactions.

(b) Explain how the loss on debenture be dealt with and show how this account will appear in the books of the company over the five consecutive years.
Or
What do you mean by buyback of shares? State the legal provisions relating to buyback of shares.

4.       (a) (i) How should be premium on shares be deals with?
(ii) A limited company has an accumulated reserve of Rs.500000. It was decided to declare bonus of Rs. 300000 out of its reserve. The bonus is to utilized as:
(1)100000 to make the existing 25000 shares of Rs. 10 each fully paid of which Rs. 6 per share called and paid.
(2)200000 by issuing 5000 bonus shares at Rs. 25 each at a premium of Rs. 15 per shares to the existing shareholders. Pass the Journal Entries in the book of the company recording the above transactions.
Or
(b) Enumerate the SEBI,s guidelines regarding issue of shares and forfeiture of shares.

5. (a) Distinguish between Amalgamation and Absorption.
(b) What do you mean by internal reconstruction of a company? Explain its scope.
Or
    Kamrup Company Ltd had the following Balance Sheet as on 31st March, 2012:
Liabilities
Amount
Assets
Amount
Authorized Capital
5000 Shares of Rs. 100 each
Issued and Subscribed Capital:
2000 Shares of Rs 100 each
200, 6% debenture of Rs 1000 each
Sundry Creditors
Bills Payable
Bank Overdraft

500000

200000
200000
75000
25000
60000
Goodwill
Land & Building
Plant & Machinery
Stock
Sundry Debtors
Cash at Bank
Preliminary Expenses
Profit & Loss A/c (Dr)
60000
90000
200000
47000
46000
12500
6000
98500

560000

560000
  
The Following schemes of reconstruction were adopted:
(i)      Without altering the number of shares in authorised, issued and subscribed capital, the face value and paid value of each shares was to be reduced to Rs. 50
(ii)    The existing debentures be converted into 100, 9 1/2%  Debentures of Rs. 1000 each
(iii)   The assets be revalued as under;
Land and Building Rs. 82000
Plant and Machinery Rs. 175000
Stock Rs. 44500
Sundry Debtors subject to a bad debts provision Rs.5000
(iv)  Goodwill, preliminary expenses and the debit balance of Profit & Loss A/C be completely written off.
Give Journal Entries to implement the above schemes of reconstruction and prepare the Balance Sheet.

6.(a) Who are the ‘Preferential Creditors’?
     (b) The balance sheet of Assam Ltd. As on 31st December, 2012:
Liabilities
Amount
Assets
Amount
Share Capital:
Authorised & Issued:
2000, 6% Preference Shares of Rs. 100 each
1000 Equity Shares of Rs. 100 each,Rs. 75 paid
3000 Equity Shares of Rs. 100 each, 60 Paid
5% debentures
(having a floating charges on all assets)
Interest outstanding
Creditors


200000
75000
180000
100000

5000
145000
Land and building
Machinery
Patent
Stock
Sundry Debtors
Cash at Bank
Profit & Loss
100000
250000
40000
50000
115000
30000
120000

705000

705000
The company went into liquidation on that date. The preference divided in arrear for two years. Creditors include a loan of 50000 on the mortgage of land and building. The assets were realized as follows:
Land and Building: 120000; Machinery: 200000; Patent: 30000; Stock: 60000; Sundry Debtors: 80000
The expenses of liquidation amounted to Rs. 10900. The liquidator is entitled to a commission of 3 per cent on all assets realised except cash and a commission of 2 percent on amount distributed to unsecured creditors. Preferential creditors amounted to Rs. 1500.
Prepare Liquidators Final Statement of Account.

7.  (a) Distinguish between Holding Company and Subsidiary Company.
(b) Mention two advantages and two disadvantages of Holding Company.

(c) A Ltd. Acquired 1000 shares of Rs. 10 each in B Ltd. At a cost of Rs. 16000 and 500 shares of Rs. 10 each in C Ltd. At a cost of Rs. 4000 on 1st January 2012 out of a total issue of share capital of 1500 and 800 shares respectively. Neither of the subsidiary company had issued any Preference Shares.
At the date of acquisition, the accounts of B Ltd. Showed a General Reserve of Rs. 12000 and credit balance of Rs. 4500 in the Profit & Loss Account and the accounts of C Ltd. Showed a debit Balance of Rs. 6400 in the Profit and loss Account.

Show how these facts would be set out in the Consolidated Balance Sheet of A Ltd. and its Subsidiary companies.