Tamil Nadu Open University (TNOU) 2009-1st Year M.Com Commerce Tamilnadu open university Advanced financial accounting and accounting standards - Question Paper

D’s Capital 16,800 Furniture 2,400
E’s Capital 12,600 Building 19,500
F’s Capital 6,000
46,400 46,400
They have agreed to take H into partnership and provide
him 4th share in the profits on the subsequent terms :
(a) That H should bring in Rs. 9,000 for goodwill and
Rs. 15,000 as capital.
(b) That 1 half of the goodwill shall be withdrawn
by the old partners.
(c) That stock and furniture to be depreciated
by 10%.
(d) That a liability of Rs. 1,080 be created against
bills discounted.
(e) That the value of building should be valued as Rs.
27,000.
(f) That a provision of 5% on debtors be created for
doubtful debts.
(g) The value of assets and liabilities other than cash
are not be altered.
You are needed to prepare profit and loss
adjustment account and opening balance sheet of the
firm as newly constituted.

7. White Ltd. agreed to acquire the business of
Green Ltd. as on 31.12.2006 on which date the Balance
Sheet of Green Ltd. was summarized as follows :
Liabilities Amount Assets Amount
60,000 shares of Rs. 10
every fully paid 6,00,000
Goodwill
Land & Building
1,00,000
3,00,000
General Reserve 1,70,000 Plant & Machinery 3,40,000
Profit and Loss account 1,10,000 Stock 1,68,000
6% Debentures 1,00,000 Sundry Debtors 56,000
Creditors 20,000 Cash 36,000
10,00,000 10,00,000
The consideration payable by White Ltd. was as
follows :
(a) A cash payment of Rs. 2.50 for every shares in
Green Ltd.
(b) The problem of 90,000 Rs. 10 shares at an agreed
value of Rs. 12.50 per share.
(c) The problem of such an amount of fully paid 5% Rs.
100 debentures in White Ltd. at 96% as is sufficient to
discharge the 6% debentures in Green Ltd. at a
premium of 20%.
(d) The directors of White Ltd. valued Land and
Building at Rs. 4,00,000 and created a provision of 5%
on debtors against doubtful debts.
(e) The expenses of liquidation of Rs. 6,000 were paid
by White Ltd.
provide journal entries to close the books of Green
Ltd. and prepare necessary accounts to close the books.

8. The subsequent are the balance sheets of H Ltd. and S
Ltd. as on 31.3.2007.
Liabilities H Ltd. S Ld. Assets H Ltd. S Ld.
Share capital
(10% Pref.
Shares of
Land and
Buildings
Machinery less
Rs. 100 each) — 1,00,000 10% depreciation 2,70,000 1,35,000
Equity shares
of Rs. 100 every 10,00,000 4,00,000
3,000 shares in
S Ltd. 4,50,000 —
General Reserve 1,00,000 50,000 Stock 2,20,000 1,50,000
Profit and Loss
a/c on 1.4.2006 40,000 30,000
Sundry Creditors
Cash
1,55,000
85,000
90,000
1,95,000
Profit and Loss
a/c on 31.3.2007 2,00,000 80,000
Sundry Creditors 1,50,000 70,000
14,90,000 7,30,000 14,90,000 7,30,000
H Ltd. acquired 3,000 equity shares in S Ltd. on
30.9.2006. As on the date of acquisition H Ltd. obtained the
value of Land and Building and Machinery of S Ltd.
should be Rs. 1,50,000 and Rs. 1,92,500 respectively.
Prepare the consolidated balance sheet of H Ltd. and its
subsidiary S Ltd. as on 31.3.2007 taking into account
the fact that assets are to be taken at their proper
values.

9. The subsequent are the balances of the Indian
Scheduled Bank Ltd :
Debit Credit
Share capital
2,50,000 shares of Rs. 20 every Rs. three paid 7,50,000
1,37,500 shares of Rs. 10 every Re. one paid 3,75,000
Debit Credit
Reserve 5,00,000
Current accounts 23,43,853
Deposit accounts 6,85,135
Endorsements for customers 1,61,599
Acceptances for customers 1,78,617
Dividend equalization fund 56,005
Profit and Loss account on 1.4.2006 1,28,139
Interest received 1,41,000
Discount charges 38,461
Commission charges 1,54,859
Dividend received less taxes 86,251
Cash in hand 3,41,644
Cash at reserve bank of India 6,21,858
Money at call and short notice 2,79,416
Bills discounted 8,33,483
Advances to customers 13,42,120
Liabilities of customers for endorsements 1,61,599
Liabilities of customers for acceptances 1,78,617
Bank premises 2,60,000
Shares in subsidiary company 2,48,000
Shares in affiliated company at cost 1,68,000
Balances with other banks 2,24,220
Investments at cost 6,18,358
Interest paid 42,048
General expenses 1,91,363
Debit Credit
Dividends Interim 32,188
Final 56,005
55,98,919 55,98,919
You are needed to prepare profit and loss account and
balance sheet after taking into account the subsequent
adjustments :
(a) Rebate on bills discounted amounts to
Rs. 3,271.
(b) Rs. 20,000 to be transferred to General Reserve.
10. The subsequent are the balance sheet of ABC Ltd. as
on 31.3.2007.
Liabilities Amount Assets Amount
12,000 shares of Rs. 10
every fully paid 1,20,000
Goodwill
Land and Building
10,000
20,500
Less calls in arrear Rs. 3
per share on 3,000 9,000
Plant and Machinery
Preliminary expenses
50,850
1,500
1,11,000 Stock 10,275
Creditors 15,425 Debtors 15,000
Provision for tax 4,000 Cash 1,500
Profit & Loss a/c 20,800
1,30,425 1,30,425
Machinery value was Rs. 10,000 excess it is proposed to
write down and to extinguish profit and loss account,
goodwill and preliminary expenses by adoption of the
subsequent scheme
(a) Forfeit the shares on which the cells are
outstanding
(b) decrease the capital by Rs. three per share
(c) Reissue the forefeited share at Rs. five per share
(d) Utlise the provision for tax if necessary
provide the journal entries for the above and prepare
the balance sheet after reconstructions.

11. discuss various methods of evaluation of Goodwill of
a firm.

12. discuss the rules relating to Redemption of
Debentures and also its kinds.

Earning:   Approval pending.