Register Number :

Name of the Candidate :

4557
M.Com. (Accounting and Finance)
DEGREE EXAMINATION, 2007
( SECOND YEAR )

( PAPER - IX )

640. ADVANCED CORPORATE

ACCOUNTING

December ] [ Time : 3 Hours

Maximum : 100 Marks

SECTION - A (5 × 8 = 40)

Answer any FIVE questions.

All questions carry equal marks.

1. Sterling Ltd. have part of their share capital in

3,500, 6 %. Redeemable preference shares of
Rs. 100 each. The company decided to redeem
the preference shares at a premium of 10 %.
The general reserve of the company shows a
credit balance of Rs. 3,00,000. Calculate the
amount to be transferred to capital redemption
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reserve. Also, show how many equity shares
than preferential creditors. All payments were
of Rs. 10 each are to be issued to meet the
made on 30th June, 2003. Interest on
redemption of preference shares.
mortgage loan shall be ignored at the time of
2. What do you mean by over subscription ? payment.
How excess application money in treated in
Prepare the liquidator’s final statement of
accounts ?
account.
3. The following are the abridged balance
sheets of P - Ltd. and S - Ltd. as on 13. What are the salient features of double
31st March, 1999 : account system ? How does it differ from
(Rs. in ‘000) single account system and double entry
Liabilities P - Ltd. S - Ltd. Assets P - Ltd. S - Ltd. system ?
Rs. Rs. Rs. Rs.
Equity share
capital of Fixed
Rs. 10 each 8,000 3,000 assets 11,000 4,730
10 % Current
preference assets 4,000 1,970
share capital
of Rs. 100 each -... 1,000
General
Reserve 4,610 980
Statutory
Reserve 390 125
Profit and
loss A/c 563 355
12 %
debentures -... 250
Current
liabilities 1,437 990
15,000 6,700 15,000 6,700
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On 31-3-2003, the company went into On 1st April, 1999, P - Ltd. takes over
voluntary liquidation. The dividend on 14 % S - Ltd. on the following terms :
preference shares was in arrears for one year. (i) P - Ltd. will issue 3,50,000 equity
Sundry creditors include preferential creditors shares of Rs. 10 each at par to the
amounting to Rs. 30,000. The assets realized equity share-holders of S - Ltd.
the following sums :
(ii) P - Ltd. will issue 11,000, 10 %
Rs. preference shares of Rs. 100 each
at par to the preference share-
Land - 80,000
holders of S - Ltd.
Buildings - 2,00,000
(iii) The debentures of S - Ltd. will be
Plant and machinery - 5,00,000 converted into an equal number of
12·5 % debentures of the same
Patents - 50,000
denomination.
Stock - 1,60,000
Calculate purchase consideration payable
Sundry debtors - 2,00,000. to S - Ltd.

The expenses of liquidation amounted to 4. Write short notes on :

Rs. 29,434. The liquidator is entitled to a (i) Endowment policy.
commission of 2 % on all assets realized
(ii) Surrender value.
(expect cash at bank) and 2 % on amounts
distributed among unsecured creditors other (iii) Annuities.

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5. The Indian Gas Company rebuilt their 12. The following was the balance sheet of X
works with double the capacity at a cost of Ltd as on 31-3-2003 :
Rs. 8,00,000. The cost of the part of old Balance Sheet of X - Ltd. As at 31-3-2003
Liabilities Rs. Assets Rs.
works was Rs. 3,50,000. In working the new
Share capital Fixed assets :
works, old materials of Rs. 15,000 was reused 14 %, 4,000
and material worth Rs. 25,000 was sold away. preference shares Land 40,000
of Rs. 100 each
Buildings 1,60,000
The costs of labour and materials are 50 % as fully paid up 4,00,000
Plant and
higher now than when the old works were 8,000 equity shares
of Rs. 100 each, machinery 5,40,000
built. You are required to make necessary Rs. 60 per share Patents 40,000
calculations and give journal entries. paid up 4,80,000
Investments Nil....
Reserves and
6. The balance sheets of C - Ltd. and D - Ltd. surplus Nil.... Current assets,
Secured loans : loans and
as at 31st December, 1986 are as follows : advances
1. 14 % debentures
C - Ltd. D - Ltd. C - Ltd. D - Ltd. (having a floating A. Current assets
Liabilities Assets charge on all
Rs. Rs. Rs. Rs. Stock at cost 1,00,000
assets) 2,30,000
Share Sundry debtors 2,30,000
capital (in Sundry Interest accrued on
shares of assets 1,32,500 1,38,200 above debentures Cash at bank 60,000
Rs. 10 each) 2,00,000 1,00,000 (Also having a
Goodwill -..... 20,000 floating charge as B. Loans and
General above) 32,200 advances Nil....
reserve 18,000 20,000 Shares in
D - Ltd. 2. Loan on mortgage Miscellaneous
Profit and of land and expenses profit
at cost 1,40,000 -.....
loss A/c 24,500 23,000 building 1,50,000 and loss A/c 2,40,000
Creditors 30,000 15,200 Unsecured loan
Current liabilities
2,72,500 1,58,200 2,72,500 1,58,200
and provisions Nil....
A. Current liabilities
sundry creditors 1,17,800
14,10,000 14,10,000
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Additional information :
1. The bills accepted by S - Ltd. are all in
favour of H - Ltd.
2. The stock of H - Ltd., includes Rs. 25,000
bought from S - Ltd., at a profit to the
latter of 20 % of sales.
3. All the profit of S - Ltd., had been
earned since the shares were acquired by
H - Ltd., but there was already the
reserve of Rs. 40,000 at that date.
5
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.
Calculate the value of minority interest.
7. Write brief notes on :
(a) Deficiency account.
(b) Social responsibility accounting.
8. What is human resource accounting ? State it
importance.
SECTION - B (3 × 20 = 60)
Answer any THREE questions.
All questions carry equal marks.
9. The following trial balance has been extracted
from the books of XYZ Ltd. as on 31-3-1989.
You are required to prepare :
(a) Profit and loss account for the year
ended 31st March, 1989
and (b) Balance sheet as on that date in the
form prescribed under schedule VI
to the Companies Act, 1956.
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You are required to make 40 % of the
Debit Rs. Credit Rs.
net premium received as reserve for unexpired
Land and building 14,000 Share capital 20,000 risks 31-3-2003 and 10 % of the net
(original cost
Rs. 30,000)
General reserve 3,000 premiums as additional reserve for the same.
8 % debentures 10,000
Furniture 800 Prepare revenue account in accordance
Bank over-draft 150
(original cost with the format prescribed by the insurance
Rs. 1,500) Sundry creditors 1,600
regulatory and development authority. Assume
Plant and machinery 10,000 Securities premium 1,000
that all items of management expenses were
(original cost Debenture redemption
reserve 4,000 incurred for the insurance business.
Rs. 20,000)
Stock (31-3-1989) 12,800 Gross profit 10,400 11. From the Balance Sheet and information given
Salaries 800 Profit and loss A/c 850 below, prepare consolidated balance sheet :
Printing and Balance Sheet as on 31st March, 2005.
stationery 120
H - Ltd. S - Ltd. H - Ltd. S - Ltd.
Debtors 7,000 Rs. Rs. Rs. Rs.
Investments (at cost) 600 Share Fixed
capital : assets 4,00,000 60,000
Cash on hand 200
Shares of Stock 3,00,000 1,20,000
Preliminary expenses 400
Rs. 10 each
Debtors 75,000 85,000
Cash at fully paid 5,00,000 1,00,000
scheduled banks 2,400 Bills
Profit and receivable 20,000 -.....
Advance income-tax 800 loss 2,00,000 60,000
Interest 200 Shares in
Reserves 60,000 40,000 S - Ltd,
Debenture interest 400 Bills 7,500 at
Directors’ fees 200 payable -..... 15,000 cost 75,000 -.....

Rent, rates Creditors 1,10,000 60,000 Preliminary

and insurance 280 expenses -..... 10,000

51,000 51,000 8,70,000 2,75,000 8,70,000 2,75,000

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Rs.... The following further information is given :

Miscellaneous expenses - 2,875 1. Depreciation is to be provided for the

Bad debts written - off - 2,206
Claims under policies less
re-insurance paid during
the year - 1,52,930
Total estimated liability
in respect of outstanding claims
as at 31st March, 2002
whether due or intimated - 6,264
Total estimated liability in respect
of outstanding claims as at
31st March, 2003 whether
due or intimated - 1,198
Reserve for unexpired risks as
at 31-3-2002 - 3,66,594
year as under :
(a) Land and buildings at 5 % on straight
line basis.
(b) Furniture and plant and machinery at
10 % on reducing balance basis.
2. Debtors worth Rs. 6,000 are less than
6 months old. Out of the meaning,
debtors worth Rs. 500 are considered bad
for which full provision is to be made.
3. The authorized share capital consists of
1,000 equity shares of Rs. 100 each, of
which 400 shares are issued and Rs. 50
per share are called and paid up.
4. Provide for :

Additional reserve for unexpired (i) Audit fees - Rs. 250.

risks as at 31-3-2002 - 45,824
(ii) Provision for
Premiums received less income - tax - Rs. 2,400.
re-insurance - 9,89,980
5. Insurance is prepaid to the extent of
Commission on re-insurance Rs. 80.
ceded - 2,41,208 Turn over
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6. The directors have recommended : Rs....

(a) Transfer of Rs. 1,000 to debenture Loss on sale of motor cars - 12,074
redemption reserve.
General manager’s salary - 24,000
(b) Transfer Rs. 400 to general reserve. Telephone - 5,100
(c) Equity dividend at 8 % on paid up Postage and telegrams - 5,150
capital.
Rent - 62,500
7. It has been decided to write - off half of
Travelling expenses - 45,600
the preliminary expenses.
Motor car expenses - 45,500
8. Previous year figures need not be given.
Establishment - 1,45,000
10. The following balances are extracted from the
books of Moonshine Insurance Co. Ltd. for Bonus - 24,000
the year ended 31st March, 2003 :
Stationery - 35,550
Rs.... Newspaper and periodicals - 14,062
Commission on re-insurance Legal expenses - 23,400
accepted - 1,86,458
Electricity charges - 16,100
Commission on direct business - 1,95,172
Provident fund contribution - 11,875
Depreciation on furniture - 650
Audit fees - 2,500
Depreciation on library - 148
Professional taxes - 250
Depreciation on motor cars - 6,240
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