Bharathiar University 2006 B.B.M BUSINESS MANAGEMENT- - Question Paper

Trial balance as on 31st March 2006.

Particulars Dr. (Rs.) Cr. (Rs.)

Called-up capita; 3,00,000
Reserve fund 1,50,000
Furniture 40,000
Buildings 80,000
Wages 50,000
Debtors and creditors 1,60,000 1,80,000
Investments 60,000
Interim dividend 30,000
Audit fees 10,000
Directors fees 15,000
Freight charges 15,000
Stationery 12,000
Purchases and sales 2,40,000 3,80,000
Returns 20,000 10,000
Bills of exchange 50,000 20,000
Machinery 80,000
P and L appropriation A/c 20,000
Cash at bank 58,000
Forfeited shares A/c 10,000
Calls in arrears 20,000
Goodwill 50,000
Stock (1.4.05) 60,000
Salaries 20,000

10,70,000 10,70,000

11. subsequent is the balance sheet of SP Ltd., as on 31.12.05

Liabilities Rs. Assets Rs.

Share capital : Land and Buildings 1,00,000
20,000 shares Rs. 10 every 2,00,000 Plant and Machinery 1,50,000
Debentures 1,00,000 Work-in-progress 30,000
Creditors 30,000 Stock 60,000
Reserve fund 25,000 Furniture 2,500
Dividend equalization fund 20,000 Debtors 25,000
P and L A/c 5,100 Bank 12,500
Cash 100

3,80,000 3,80,000

The company is absorbed by AT Ltd., on the above date; the consideration for the absorption is the discharge of debentures at a premium of 5%; taking over the liability in respect of sundry creditors and a payment of Rs. seven in cash and 1 share of Rs. five of AT Ltd., at the market value of Rs. eight per share in exchange for 1 share in SP Ltd., costs of liquidation of Rs. 5,000 is to be met by the transferee co.

Prepare necessary ledger accounts in the books of SP Ltd., and pass journal entries in the books of AT Ltd., assuming that amalgamation is in the nature of purchase.

12. ABC Co. Ltd., was formed with a share capital of Rs. 5,00,000 in shares of Rs.100 every ; issued to public 4,000 shares payable as follows :

Rs. 20 on application
Rs. 40 on allotment (including Rs. 10 premium)
Rs. 25 on I call
Rs. 25 on II and final call.

Company received applications for 6,000 shares and directors rejected and refunded excess application money. Directors did not make II and final call.

When the I call was made, 1 shareholder holding 500 shares failed to pay the I call money and a different shareholder holding 600 shares failed to pay, also the I call money. These shares were forfeited and re-issued at Rs. 60 per share.

Pass journal entries and prepare balance sheet.

13. Balance sheet of A Co. Ltd., as on 31st March 2005.

Liabilities Rs. Assets Rs.

Share capital Goodwill 15,500
15,000 shares of Rs. 10 every 1,50,000 Buildings 85,000
Creditors 54,000 Machinery 40,000
Stock 27,000
Debtors 22,500
P and L A/c 14,000

2,04,000 2,04,000

A new company was formed with a nominal capital of Rs. 2,00,000 in shares of Rs. 10 every to take over assets and liabilities of existing Co.

Terms were :

i) Goodwill be eliminated and machinery be valued at 20% less in the books of New Co.

ii) That 15,000 shares of Rs. 10 every be issued to shareholders in the old Co., Rs. 7.50 per share paid up.

iii) The shareholders to pay the balance of Rs. 2.50 per share in cash.

iv) The creditors of the Co. to be satisfied by the payment to them half of the amount in cash and by the problem of 5% debentures as to the other half. Prepare necessary ledger accounts in the books of old Co. and show the entries to open the books of new Co. and prepare the opening balance sheet.

14. A Ltd. and B Ltd., carrying on similar business decided to amalgamate and form a new Co. to take over assets and liabilities of both the companies and agreed that fully paid shares of Rs. 100 every shall be issued by New Co. for the value of net assets of every of the old companies :

Balance sheets of A Ltd., and B Ltd., as on 31st March 2006.

Liabilities A Ltd B Ltd Assets A Ltd. B Ltd.

Share capital :
Shares of Rs. 50
every 50,000 40,000 Goodwill 5,000 2,000
General reserve 20,000 Land and Buildings 17,000 10,000
P and L A/c 3,000 Plant and Machinery 24,000 16,000
Creditors 4,000 8,000 Stock 10,000 7,500
Bills payable 4,000 Debtors 12,000 7,500
Bank overdraft 8,000 Furniture 5,000 7,500
Bank 8,000 300
P and L A/c 5,700

81,000 56,000 81,000 56,000

subsequent is the scheme of evaluation of business of the 2 companies :

A Ltd : i) To give for RBDD 5% on debtors.
ii) To write off stock by Rs. 400
iii) To write of plant and machinery by 33 1/3%

B Ltd : i) To eliminate goodwill
ii) To write off bad debts of Rs. 1,000 and give RBDD 5% on debtors.
iii) To write off stock by Rs. 1,400
iv) To depreciate plant and machinery by 10%.

calculate purchase consideration and prepare necessary ledger accounts in the books of A Ltd and B Ltd. and prepare balance sheet of the new company.

Earning:   Approval pending.