Bangalore University 2007 B.Com Corporate Accounting - I - Question Paper

III Semester B.Com. Examination, Nov./Dec. 2005
COMMERCE
3.3 : Corporate Accounting - I

Time : three Hours Max. Marks : 90

Instruction : Answers should be written completely either in English or in Kannada.

part - A

(Answer any ten sub-questions. every sub-question carries two marks.) (10x2=20)

1. a) What is meant by Underwriting ?

b) What is partial underwriting ?

c) What is redemption of preference shares ?

d) provide the journal entry for transfer of divisible profits to Capital Redemption Reserve Account.

e) Mention the factors determining the value of goodwill.

f) What is avg. capital employed ?

g) What is meant by normal rate of return ?

h) elaborate the circumstances under which shares are valued ?

i) How do you compute intrinsic value of shares ?

j) provide 2 examples of contingent liabilities.

k) What is the permissible monthly remuneration to a managerial person, in case of inadequate profits, when the effective capital is ranging from five crores and 25 crores ?

l) State under what headings the subsequent items will appear in the Balance Sheet of a company :

i) Calls unpaid ii) Loose Tools

part - B

(Answer any 5 of the subsequent. every ques. carries five marks.) (5x5=25)

2. A company issued 1,00,000 shares of Rs. 10 every. The whole problem was fully underwritten by A, B, C and D as follows :

A : 40,000 B : 30,000 C : 10,000 D : 20,000

The company received applications for 90,000 shares of which marked applications were as follows :

A - 44,000 B - 22,000 C - 2,000 D - 18,000

Determine the liability of every underwriter.

3. A company had 5,000, 6% redeemable preference shares of Rs. 100 every fully paid. These shares were due for redemption on 31st March 2005 at a premium paid. To carry out the redemption the company issued 1,250 equity shares of Rs. 100 every at a premium of 7.5%. The company had a balance of Rs. 25,000 in securities account and Rs. 4,87,500 in profit and loss account. Pass journal entries.

4. From the subsequent information, compute the value of goodwill under,
a) 3 years purchase of super profits method.
b) Capitalisation of super profits method.
i) avg. Capital employed : Rs. 8,70,000
ii) Net profits of the firm for the past three years were : Rs. 1,22,000 ;Rs. 98,500 and Rs. 1,75,000.
iii) Managerial remuneration if employed elsewhere Rs. 18,000 per annum.
iv) Normal rate of return 8%.

5. From the subsequent particulars compute the value of an equity share under yield method :

Earning:   Approval pending.