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Sunday, May 21, 2017

Dibrugarh University Solved Question Papers: Corporate Accounting (2011 - Old Course)

Corporate Accounting 2011 (Old Course)
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 redeemable 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 investments 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:
  1. Stock as on 31st March, 2007 Rs 88,000
  2. Provide for income tax at 50%
  3. Depreciate Plant and Machinery at 15%; Furniture at 10% and Patents at 5%
  4. On 31st March, 2007 outstanding rent amounted to Rs 800 and salaries Rs 900
  5. The Board recommends payment of a dividend @ 15% per annum. Transfer the minimum required amount to General Reserve.
  6. Provide Rs 510 for doubtful debts
  7. Provide for managerial remuneration at 10% on profit before tax eliminated
  8. Ignore corporate dividend tax.
STATEMENT OF PROFIT AND LOSS
In the books of Bee Ltd.
For the year ending 31st March, 2007
Particulars
Note
No.
Amount
  1. Incomes:
Revenue from Operations (net Sales)
Other Income


3,40,000
3,000
Total Income

3,43,000
  1. Expenses:
Purchases Stock in trade                                        2,45,000
Less: Return                                                                 10,000

Changes in Inventories:
Operating Stock                                                         75,000
Less: Closing Stock                                                     88,000
                          
Employee Benefits Expenses (Salaries + Wages + 900)
Finance Cost
Depreciation and Amortization Expenses
Other Expenses  










A
B


2,35,000



(13,000)

38,400
NIL
6,290
13,310
Total Expenses

2,80,000
  1. Net Surplus before Tax (I – II)
Less: Income tax @ 50%

63,000
31,500
Net Surplus after tax

31,500
A. Depreciation and Amortization

Amount
Plant & Machinery (29,000 x 15%)
Furniture (17,000 x 10%)
Patents (4,800 x 5%)
4,350
1,700
240

6,290
B. Other Expenses

Amount
Rent                                                                   4,000
Add: Outstanding                                               800

Sundry Trade Expenses
Carriage
Provision for bad debt

4,800

7,050
950
510

13,310
BALANCE SHEET

Particulars
Note
No.
Amount
  1. Equity and Liabilities:
  1. Shareholders’ fund
  1. Share Capital
  2. Reserves and Surplus



A


1,00,000
38,000


1,38,000
  1. Non-Current Liabilities
  2. Current Liabilities:
  1. Trade Payable (Creditors + Bills Payable)
  2. Other Current liabilities
  3. Short term provision



B
C
NIL

24,500
1,700
46,500
                              Total

72,700
Total of Equity and Liabilities (1+2+3)

2,10,700
  1. Assets:
Non-Current Assets
  1. Fixed Assets
  1. Tangible Fixed Assets
  2. Intangible Fixed Assets







39,950
4,560
                             Total Fixed Assets

44,510
Current Assets
  1. Trade Receivables (5,000 + 27,500 – 510)
  2. Inventories
  3. Cash & Cash Equivalents (Cash at Bank)


32,000
88,000
46,200


1,66,200
                           Total of All Assets

2,10,700
. Reserve & Surplus

Amount
General Reserve                                                                           15,500
Add: Transfer to Reserve                                                              1,575

Surplus                                                                                            15,000
Add: Net Surplus after Tax                                                          31,500
                                                                                                        46,500
Less: (1) Dividend (1,00,000 x 15%)                                           15,000
                                                                                                31,500
Less: Dividend Paid                                                                         9,000
(2) C.D.T                                                                                       NIL
                                                                                                22,500
(3) Transfer to Reserve (31,500 x 5%)                                 1,575

17,075









20,925

38,000
B. Other Current Liabilities

Amount
Outstanding Rent
Outstanding Salaries
800
900

1,700
C. Short Term Provisions

Amount
Dividend Paid
Provision for tax
15,000
31,500

46,500

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:
  1. The equity shareholders have agreed that their Rs 50 shares to be reduced to Rs 2.50 per share.
  2. They have also agreed to subscribe in cash for three new equity share of Rs 2.50 each for each share held by them.
  3. 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.
  4. 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.
  5. The directors have agreed to subscribe in cash for additional 40000 new equity shares of Rs 2.50 fully paid.
  6. 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.
  7. 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.
Journal Entries
In the books of XYZ Ltd
Particulars
L/F
Amount
Amount
Equity Share Capital A/c (50)                                                                       Dr.
To Equity Share Capital A/c (2.5)
To Capital Reduction A/c (47.5)

7,50,000

37,500
7,12,500
Bank A/c (15,000x3x2.5)                                                                              Dr.
To Equity Share Capital A/c

1,12,500

1,12,500
7% Preference Share Capital A/c (50)                                                       Dr.
To 5% Preference Share A/c (12,000x4x10)
To Capital Reduction A/c

6,00,000

4,80,000
1,20,000
Bank A/c                                                                                                          Dr.
To Equity Share Capital A/c (12,000x6x2.5)

1,80,000

1,80,000
Loan A/c                                                                                                           Dr.
To Preference Share Capital A/c (12,000x10)
To Equity Share Capital A/c (12,000x2.5)

1,50,000

1,20,000
30,000
Bank A/c                                                                                                          Dr.
To Equity Share Capital A/c

1,00,000

1,00,000
Loan A/c                                                                                                           Dr.
To Bank A/c

2,00,000

2,00,000
Capital Reduction A/c                                                                                    Dr.
To Capital Reserve A/c
To Profit & Loss A/c
To Preliminary Expenses A/c
To Plant & Machinery A/c
To Goodwill & trade marks A/c

8,32,500

28,500
4,40,000
11,000
35,000
3,18,000
Balance Sheet
Particulars
Note No.
Amount
  1. Equity & Liabilities:
  1. Shareholders fund:
  1. Share Capital
Equity Share Capital
5% Preference Share Capital
  1. Reserve & Surplus:
Capital Reserve




4,60,000
6,00,000

28,500
  1. Non Current Liabilities:
Long Term Borrowings
Bank Loan A/c
  1. Current Liabilities
  1. Trade Payable
  2. Other Liabilities


2,23,000


2,07,000
35,000
Total (1 + 2 + 3)

15,53,500
  1. Assets:
  1. Non Current Assets:
  1. Fixed Assets
Tangible Fixed Assets: (4,00,000 + 2,33,000)
  1. Current Assets
  1. Inventories
  2. Trade receivable
  3. Cash & cash equivalent




6,33,000

4,00,000
3,28,000
1,92,500
Total (1 + 2)

15,53,500

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 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. includes 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.
Illustration 3:
  1. Degree of Control:
H. Ltd.
S. Ltd  
  1. Profit for the year = Closing balance – Opening balance + Transfer to Reserve + Loss by fire
= 45,000 – NIL + 30,000
=75,000
  1. Control Chart A:
Particulars
Total
H. Ltd
S. Ltd
  1. Pre-acquisition Profit:
General Reserve (1,50,000 – 30,000)
Surplus upto (1-10-14)
                                                                                    
                                                              

1,20,000


37,500



1,57,500
1,26,000
31,500
  1. Post-acquisition Profit:
Reserve
Surplus                       = 37,500
Less: Transfer to Reserve                    = 30,000

30,000



7,500







37,500
30,000
7,500
  1. Share Capital
1,00,000
8,00,000
2,00,000
Minority Interest


2,39,000

  1. Control Chart B:
Particulars
Amount (Rs.)
Cost of Investment
Share
Debenture  

8,80,000
80,000

Less: (i) Pre-acquisition Profit
(ii) Share Capital
(iii) Debentures
9,60,000
1,26,000
8,00,000
80,000
Capital Reserve
Less: Goodwill
46,000
1,00,000
Goodwill
54,000

  1. Control Chart C:
Particulars
Machinery
Furniture
Stock
Debtors
B/R
Cash
T/P
B/P
H Ltd.
S Ltd.
5,00,000
4,50,000
20,000
40,000
5,20,000
6,50,000
1,80,000
2,70,000
10,000
15,000
2,80,000
1,80,000
4,00,000
2,00,000
20,000
10,000

9,50,000
60,000
11,70,000
4,50,000
25,000
4,60,000
6,00,000
30,000









Less: Mutual owing





20,000


8,000



20,000


8,000

9,50,000
60,000
11,70,000
4,30,000
17,000
4,60,000
5,80,000
22,000
  1. Control Chart D:
Particulars
Amount (Rs.)
Surplus
Add: Post Profit
50,000
30,000

80,000
Consolidated Balance Sheet of H Ltd. & S Ltd
Particulars
Amount (Rs.)
  1. Equity & Liabilities:
  1. Shareholder’s Fund
  1. Share Capital
  2. Reserve & Surplus
General Reserve                                                                 1,00,000
Surplus                                                     50,000
Add: Revenue Profit                              30,000                   80,000

  1. Minority Interest
  2. Non-Current Liabilities
Long-term Borrowing
9% Debentures                                                                                2,00,000
Less: 9% Debentures held By H Ltd.                                                80,000
  1. Current Liabilities:
Trade Payable
Bills Payable  


20,00,000



1,80,000

2,39,000



1,20,000

5,80,000
22,000
Total (a + b + c)
31,41,000
  1. Assets:
  1. Non-Current Assets
  1. Fixed Assets
Tangible
Machinery
Furniture
Intangible
Goodwill

  1. Current Assets:
  1. inventories
  2. Trade Receivable
  3. Bills Receivable
  4. Cash & Cash Equivalent




9,50,000
60,000

54,000


11,70,000
4,30,000
17,000
4,60,000
Total (a + b)
31,41,000

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