B.Com-B.COM 3rd Sem CORPORATE ACCOUNTING(Bangalore University, Bangalore-2006)

III Semester B.Com. Examination, Nov./Dec. 2006
CORPORATE ACCOUNTING-I

Time:3 Hours
Max.Marks: 90


SECTION-A

Answer any ten sub-questions. (10*2=20)

1. A) State the various types of underwriting.
B) Distinguish between marked and unmarked forms.
C) Distinguish between open(or pure) underwriting and firm underwriting.
D) Give the meaning of divisible profits.
E) What is capital redemption reserve?
F) State any four circumstances necessitating valuation of goodwill.
G) What is super profit?
H) State any two factors to be considered for valuation of shares.
I) How do you calculate the value of shares under break-up value method/
J) Distinguish between Profit and Loss a/c and Profit and Loss Appropriation Account.
K)How do you treat unclaimed dividend in the final accounts of company?
L) What is the maximum rate of managerial remuneration payable as per companies Act, 1956?



SECTION-B

Answe any five of the following. Each question carries five marks. (5*5=25)

2. Ashwin ltd., issued 50,000 equity shares of Rs. 100 each which were underwritten as follows:
A-20,000 Shares; B-15,000 shares
C-10,000 Shares and D-5,000 shares

The company received applications for 44,000 shares of which marked forms were as under:
A-24,000 shares; B-8,000shares
C- 6,000 shares; and D-3,000 shares

Determine the liability of each underwriter.

3. Following is the Balance Sheet of Bhoomika Ltd., as at 31-3-2007:

Liabilities Rs. Assets Rs.

Preference Share fixed assets 18,50,000
Rs 100 each Rs. 80 paid 8,00,000 Investments 7,00,000
Equity shares of Rs .100 stock and debtors 4,00,000
each fully paid 10,00,000 cash and bank 30,000
Reserve Fund 3,00,000 Preliminary expenses 20,000
P and L A/C 2,00,000
Share Premium 1,00,000
Current Liabilities 6,00,000
30,00,000

As on the date the preference shares are redeemed by making fresh issue of sufficient number of equity shares. Investments worth Rs.3,50,000 are sold at a loss of Rs.50,000.
You are required to pass necessary journal entries.


4. The profits disclosed by Chaitra Ltd., for the past 5 years were as follows:

2002- Rs. 40,000 (including abnormal profit Rs.5,000)
2003- Rs. 50,000 (after charging abnormal loss Rs.10,000)
2004- Rs. 45,000 ( excluding Rs. 5,000 insurance premium)
2005- Rs.60,000
2006- Rs.80,000 (including profit on sale of building Rs. 20,000)
You are required to calculater the value of goodwill at 2 years purchase of average profits


5.Following is the balance sheet of Nischal .., as at 31-3-2007
LIABILITIES Rs. ASSETS Rs
8,000 class ’A’ equality shares 4,00,000 Fixed assets 7,60,000
10,000 class ’B’ equity shares 3,00,000 Current assets 2,40,000
Reserves and Surplus 1,00,000
Current liabilites 2,00,000
10,00,000 10,00,000
Nishanth Ltd., is interested in purchasibing substantial number of equity shares of Nischal Ltd.,For this
Purpose ,you are requested to ascertain in intrinsic value of each class of equity share assuming that the value of fixed assets is 20% more and the value of current assets is 10% less


6.Following is the balance sheet of Pooja Ltd., as at 31-3-2007
LIABILITIES Rs. ASSETS Rs
Equity shares of Rs 10 each 8,00,000 fixed assets 12,00,000
Reserve Fund 1,00,000 Current assets 3,00,000
12% Debentures 2,00,000
Current liabilities 4,00,000
15,00,000 15,00,000
The profit of the company for the past 3 years before charging interest on debentures
Were Rs. 1,52,000; Rs. 1,56,000 and Rs. 1,54,000 respectively. Normal rate of return is 12%.You are required to ascertain the yield value of shares assuming that 20% of the profit is transferred to reserve fund each year(Ignor taxation)

7.From the following particulars of Rajesh Ltd.,prepare Profit and Loss Appropriation A/c
a) Net profit before tx Rs. 16,75,000
b) Provision for taxation 33.5%
c)Transfer to Reserve Fund 20% after tax
d)Share capital:
i)30,000, 15% preference shares of Rs. 100 each
Ii)30,000, equity shares of rs. 100 each Rs 75 paid

8)State any five advantages of underwriting
9)State any five circumstances executing valuation of shares

SECTION-C
Answer any three of the following(3*15=45)


10.Apoorva Ltd., issued 5,00,000 equity shares of Rs.10 each at a premium of 20%
The whole of the issue is underwritten by Apoorva ,Bhoomika and Chaitra as under:
Apiirva -2,50,000 shares (Firm underwriting 25,000 shares)
Boomika-1,50,00 shares(Firm underwriting 15,000 sh ares)
Chitra-1.00.000 shares(Firm underwriting 10,000 shares)
The underwriting commission is 5% on the issue price and the company agreed to treat firm
Underwriting application as marked forms.
Thae company received application for 4,00,000 rquity shares (excluding firm underwriting )of which marked forms were as under:
Apoorva-1,15,000 shares
Bhoomika-1,25,000 shares
Chaitra -1,30,000 shares
You are required to show -
a)Net liability of underwriters in terms of number of shares
b)Commission due to each underwriter and
c)Net amount from each underwriter to the company



11.Following is the Balance sheet of Bhaskar Ltd.., as at 31-3-2007
LIABILITES Rs ASSETS Rs
Preference shares 30,000 Fixed Assets 4,50,000
Shares of Rs. 10 each 3,00,000 Investments 5,00,000
(-)Calls in arrears 25,000 2,75,000 Stock and Dedtors 2,00,000
Equity shares Cash and Bank 50,000
40,000 shares of Rs.10 each 2,00,000
General Reserve 2,00,000
Current Liabilities 3,25,000
12,00,000 12,00,000
On the above date the preference shares are redeemed .Calls in arrears were recovered in full and sufficient number of equity shares of Rs. 10 each are issued at a premium of 50% .For the purpose of making payement to preference shareholders,
Bank overdraft facility is arranged to the extent necessary so as to leave cash and bank balance at Rs. 30,000

You are required to pass necessary journal entries and show the balance sheet after redemption


12.The following particulars are available in respect of the business =carried on by Indira Ltd.,
1)Profit earned for the years:
2004-05 Rs.50,000
2005-06 Rs 60,000
2006-07 Rs.55,000
2)Profit of 2004-05 included a non -recurring income of Rs.5,000
3)During the year 2005-06 closing stock was undervalued by Rs.10,000
4)Normal rate of return 10%
5)average capital employed Rs. 3,00,000
6)Present value of an annuity of one rupee for 5 years at 10% is Rs 378

You are required to calculate the bvalue of goodwill:
a) As per five years purchase of super profits
b) As per capitalisation of super profits and
c) As per Annuity Method

13.From the given Balance Sheet and other information you are required to ascertain
The value of equity shares under:
1)Intrinsic value method
2)Yield value method and
3)Fair value method.Ignore taxation
BALANCE SHEET OF RKS Ltd., AS AT 31-3-2007
LIABILITIES Rs. ASSETS Rs.
2,000 shares of Rs . 100 each 2,00,000 Land and Buildings 1,10,000
General Reserve 40,000 Plant and Machinery 1,30,000
P and L A/c 32,000 Patents and Trade marks 20,000
Creditors 1,28,000 stock 48,000
Bills Payable 60,000 Debtors 88,000
Cash and Bank 52,000
Preliminary Expenses 12,000
4,60,000 4,60,000
An independent valuer valued the assets of the company as under:
Land and Building Rs. 2,40,000; Goodwill Rs. 1,60,000 and Plants and Machinery
Rs. 1,20,000. The other assets are worth their book value
The profits of the company have been as follows:
2004-05-Rs80,000
2005-06-Rs90,000
20006-07-Rs1,06,000The company follows the practice of transferring 25% of profits to general reserve
Normal rate of return is 12%


14Following are the balances of NSK ltd., as at 31-3-2007 .You are required to prepare Final Accounts of the company after taking additional information into
Consideration:
DEBITS Rs. CREDIT Rs.
Premises 30,72,000 Share capital 40,00,000
Plant 33,00,000 12% debentures 30,00,000
Stock on 1-4-2006 7,50,000 P and L A/c 2,62,500
Debtors 8,70,000 Creditors 7,70,000
Goodwill 2,50,000 Sales 41,50,000
Cash and Bank 4,06,500 general Reserve 2,50,000
Calls-in-arrears 75,000 RDD on 1-4-2006 35,000
Interim dividened paid 3,92,5000
Purchases 18,50,000
Preliminary Expenses 50,000
Wages 9,79,8000
General Expenses 68,350
Salaries 2,02,250
Bad debts 21,100
Debenture interest paid 1,80,000
1,24,67,500 1,24,67,500
ADDITIONAL INFORMATION:
1)Closing stock is valued at Rs. 10,50,000
2)Depreciation plant at 15%
3)Write off Rs. 5,000 from preliminary expenses
4)Half year debenture interest is due
5)Write of Rs. 20,000 futher bad debts and create new reserve for bad debts at
5% on debtors
6)Transfer Rs.25,000 to General Reserve
7)Ignore corporate dividened tax