Diploma-Diploma Financial Management 0 Other(Acharya N G Ranga Agricultural University, Andhra Pradesh-2006)
Sunday, 23 December 2012 09:47Pramod Dabholkar
Financial Accounting (Octomber 2006)
Time: 3 Hours Marks: 100
NB:
1. Question No. 1 is compulsory.
2. Attempt any five questions from question Nos. 2 to 9.
3. All working notes should form part of answer.
4. Figures to the right indicate full marks assigned to each question.
5. Specify assumptions, if any, while solving the questions.
Q. 1)Shubha Ltd. absorbed Sushma Ltd. with effect from 1st April, 2005 when their Balance sheets as on 20 31-03-2005 were as under: 20
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Liabilities Shubha Ltd.Rs. Sushma Ltd.Rs. Assets Shubha Ltd.Rs. Sushma Ltd.Rs.
Share Capital: Fixed Assets
10% Preference Share of
Rs. 100 each 2,00,000 2,00,000 Land & Building 2,20,000 1,40,000
Equity Share of Rs. 100 each 5,00,000 2,00,000 Plant & Machinery 4,20,000 2,60,000
Reserves & Surplus:
Revaluation Reserves 20,000 -- Current Assets, Loans
Export Profit Reserves 40,000 20,000 & Advances 2,90,000 1,60,000
General Reserve 2,00,000 60,000 Stock 1,20,000 1,40,000
Secured Loans Sundry Debtors 1,30,000 90,000
10% Debentures of Rs. 100 1,20,000 Bills Receivable 20,000 10,000
15% Debentures of Rs. 100 80,000 -- Bank
Current Liabilities & Provisions
Sundry Creditors 1,60,000 2,00,000
12,00,000 8,00,000 12,00,000 8,00,000
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* Terms Of Amalgamation:
1. Shubha Ltd. will issue Eight equity shares for Five equity shares in Sushma Ltd.
2. 11 % Preference shareholders of Sushma Ltd. will be issued equal number of Equity shares inShubha Ltd.
3. 10% Debentureholders of Sushma Ltd. aredischarged by Shubha Ltd by issuing equal numberof its 15% Debentures of Rs. 100 each.
4. All the Assets and liabilities of Sushma Ltdare taken over at book values except the following.
* (i)Fixed Assets at 10% more than book values.
* (ii)Stock at Rs. 1,44,000
* (iii)Debtors at Rs. 1,25,000
* (iv)Bills Receivables at Rs. 81,000
* You are required to-
* a.Compute Purchase consideration.
* b.Prepare Ledger Accounts to close the books of Accounts of Sushma Ltd.
* c.Pass journal entries and prepare Balance-sheet after Amalgamation in the books of Shubha Ltd. applying Purchase Method.
Q. 2)Following is the Balance sheet of PARAMOUNT LTD. as on 31-03-2005 :— 16
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Liabilities Rs. Assets Rs.
Share Capital Fixed Assets
6,000-8% Preference shares ofRs. 100 each 6,00,000 Goodwill 60,000
50,000 Equity Shares of Rs, 10 each. 5,00,000 Building 3,00,000
Capital Reserves 50,000 Furniture 1,00,000
Secured Loans : Current Assets, Loans & Advances
5% Debentures of Rs. 100 each 3,00,000 Stock 1,50,000
Debenture Interest Due 50,000 Sundry Debtors 75,000
Current Liabilities Bank 1,00,000
& Provisions : Cash 25,000
Sundry Creditors 1,80,000 Miscellaneous Expenditure
Discount on Debentures 30,000
Profit & Loss Account 5,00,000
Patents & Trade Marks 40,000
16,80,000 16,80,000
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* Note: Preference dividend is in arrears for three years.
* The following scheme of reconstruction was prepared and duly approved by the court.
1. The Preference Shares shall be converted into equal Number of 9% Preference Shares of Rs. 50 each.
2. The equity shares shall be reduced to Rs. 3 each. However the face value will remain the same.
3. 5% Debentures shall be converted into equal number of 6% Debenture, of Rs. 75 each. The debenture holders also agreed to waive 50% of the accrued interest.
4. Arrears of preference dividend are to be reduced to one year's dividend which is paid in cash.
5. The Sundry creditors agreed to waive 30% of their claims and to accept Equity shares for Rs. 30.000 in part settlement of their renewed claims.
6. The assets are to be revalued as under :
Building Rs. 3.50,000
Plant & Machinery Rs. 2, 50,000
Furniture Rs. 80,000
Stock Rs. 1, 00,000
Sundry Debtors Rs.70,000
7. Intangible assets and fictitious assets to be written off.
* Pass journal entries, prepare Capital Reduction Account and Balance Sheets after reconstruction in the books for Paramount Ltd.
Q. 3)Following Trial Balance is extracted from the books of Shrikrishna (Pvt.) Ltd. as on 31-03-2005. The 16 company was Incorporated on 1-08-2004 to take over the business of a proprietary concern from 1-4-2004. The authorised share capital was 50,000 Equity shares of Rs. 10 each. The Purchase consideration was settled on 1-10-2004, being Rs. 1, 25,000. It was in the form of 10,000 shares of Rs. 10 each and the balance in the form of debentures of Rs. 100 each. :— 16
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Trial Balance as on 31st March, 2006
Particular Debit Rs. Particular Credit Rs.
Opening Stock 23,600 Sales 2,14,000
Purchases 75,800 Sundry Creditors 40,200
Carriage Inwards 5,200 Bills Payable 29,000
Salaries 24,000 Capital 1,15,000
Office Expenses 8,100 Interest on Investments 1,800
Postage & Telephones 9,000
Printing & Stationery 9,900
Office Rent 36,600
Carriage Outwards 7,200
Selling Expenses 6,900
Directors' Fees 3,200
Interest on Purchase consideration 5,625
Preliminary expenses 7,500
Sundry Debtors 54,000
Bills Receivable 5,375
Fixed Assets 1,00,000
Investments 18,000
4,00,000 4,00,000
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* If is further informed that:
1. Closing stock is valued at Rs. 11,200.
2. Fixed Assets include furniture of Rs. 10,000 purchased on 01-10-2004; Depreciation is to be charged on Fixed Assets @ 10% p.a.
3. Total sales for the post-incorporation period are three times the total sales for the pre-incorporation period.
4. Rate of Interest on debentures is 10% p.a. while on purchase consideration is 9% p.a.
5. Preliminary expenses should be written off.
6. Investments are purchased by the proprietor during 2003-04.
Prepare Trading and Profit & Loss Account for the Year ending 31-03-2005 showing the treatment of Pre-incorporation and post-incorporation profits separately. Prepare Balance Sheet as on the same date.
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Q. 4) (a)Nandlal imported goods from US company worth US $ 5 lac on 10-08-2004 when exchange rate 16 was US $ 1 = Rs. 42.90. He agreed to pay 5 installments as below: 16
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Date Installment (Us S) Rate of Exchange (Rs.)
10-10-2004 75,000 42.75
10-12-2004 1, 50,000 43.50
10-02-2005 60,000 44.80
10-04-2005 75,000 42.90
10-06-2005 Balance 43.00
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The rate of exchange was Rs. 43.00 as on 31-03-2005. Pass journal entries [including those for cash] in the books of Nandlal in accordance with AS-11.
* b) Madhav exported goods to US Company worth US $1 lac on 01-03-2004 when exchange rate was US $ 1 = Rs. 43.00. The payment was received as below:—
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Date Installment (Us S) Rate of Exchange (Rs.)
01-02-2004 20,000 (Advance) 43.25
15-03-2004 25,000 43.50
01-05-2004 Balance 42.75
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* The rate of exchange was US $ 1 = Rs. 43.75 as on 31-03-2004.
* Pass journal entries in the books of Mr. Madhav [including those for cash] in accordance with AS
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Q. 5)'Following is the Balance sheet of NINAD LTD. as on 31-03-2005:— 16
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Liabilities Rs. Assets Rs.
Equity Shares of Rs. 10 each 5, 00,000 Fixed Assets 7, 00,000
8% Preference Shares of Rs. 100 each 1, 00,000 Current Assets 4, 80,000
7.5% Debentures of Rs. 100 each 2, 00,000 Preliminary Expenses 20,000
Unsecured Loans 1, 00,000
Reserve and Surplus 2, 00,000
Current Liabilities 1, 00,000
12, 00,000 1,20,000
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* Additional Information
1. Details of Sales Expenses and Interests for the last Five years for the year ended are as under:
Particulars 31.03-2001 31.03-2002 31.03-2003 31-03-2004 31-03-2005
Rs. Rs. Rs. Rs. Rs.
Sales 4,50,000 5,50,000 7,00,000 4,00,000 8,00,000
Expenses 1,75,000 2,90,000 3,00,000 1,55,000 4,00,000
Interest on Loan 10,000 20,000 25,000 30,000 10,000
Interest on Debentures 15,000 15,000 15,000 15,000 15,000
2. Rate of Income tax is 40%
3. Normal rate of return is 12.5%
4. Fixed assets are valued at Rs. 10, 00,000 and current assets are valued at Rs. 6,00,000.
* Find cut value of Equity share under:-
* (i)Net Assets Method
* (ii)Earning Capacity Method
* (iii)Fair Value Method.
Q. 6)Mr. Confused is the Accountant of M/s Ultimate Confusion Ltd. He presents to you the following Trial Balance as on 31-03-2005. The cash in hand on 31-03-2005 is Rs. 750. 16
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Particular Rs. Particular Rs.
Bank Balance 72,900 Subscribed capital 4,00,000
Calls in Arrears 7,500 6% Debentures 3,00,000
Land & Building 3,00,000 Profit and Loss A/c [Cr.] 13,625
Machinery 2,97,000 Sundry Debtors 87,000
Interim Dividend Paid 37,500 Sales 4,15,000
Stock [ 1-4-2004] 75,000 Preliminary Expenses 5,000
Sundry Creditors 40,000 Sinking Fund 75,000
Bills Payable 38,000
Furniture 7,200
Purchases 1,85,000
Provision for Bad Debts 4,375
Investments 75,000
Salaries & Wages 1,03,600
Fuel 13,200
Rent, rates & Taxes 3,800
Discounts Allowed 6,400
Directors Fees 5,700
Bad Debts 2,100
Debenture Interest 9,000
Sundry Expenses 2,350
Deposits from Public 10,000
12,95,625 12,95,625
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After locating the mistakes and making the following adjustments, prepae Trading and Profit and Loss Account for the year ended 31-03-2005 and Balance sheet as on that date in a vertical form. Ignore previous year's figures.
1. Authorised capital of the company is 60,000 Equity shares of Rs. 10 each. The calls in arrears are @ Rs. 5 per share.
2. Stock on 31-03-2005 was Rs. 1, 37,120.
3. Write off 1/5 th of the preliminary expenses.
4. The Details of fixed Assets are as under.
Particular Original Cost Rs. Depreciation till 31-03-2004 Rs. Rate of Depreciation
Land & Building 3,50,000 50,000 5%
Machinery 4,00,000 1,03,000 20%
Furniture 10,000 2,800 10%
The depreciation during the year is to be charged on W.D.V. as at the beginning of the year. Therewere no additions or deductions during the year.
* Note: Rectified Trial Balance is not required.
Q. 7)Following is the Balance-sheet of INDICA LTD. as on 31-12-2004:— 16
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Liabilities Rs. Assets Rs.
Share Capital Fixed Assets
Authorised: Land & Building 40, 00,000
10, 00,000 Equity shares of Rs. 10 each 1,00, 00,000 Plant & Machinery 22, 00,000
Issued, Subscribed & Called Up Furniture 20, 00,000
8, 00,000 Equity shares of Investments 20, 00,000
Rs. 10 each,Rs. 8 per share paid up 64, 00,000 Current Assets, Loans & Advances
Reserves & Surplus: Debtors 42, 00,000
Profit & Loss Account 50, 00,000 Bills Receivables 10, 00,000
Security Premium Account, 30, 00,000 Bank Balance 45,00,000
Secured Loans: Stock 20, 00,000
10% Debentures 30, 00,000
Unsecured Loans 10, 00,000
Current Liabilities & Provisions
Sundry Creditors 20, 00,000
Bills payable 10, 00,000
Provision for Tax 5, 00,000
2, 19, 00,000 2,19,00,000
Keeping in view the legal requirements ascertain the maximum number of Equity shares that Indica Ltd. Can buyback @ Rs. 20 per share.
* Pass journal entries to record buyback and prepare a Balance-sheet thereafter.
Q. 8)A company issued 10,000-8% Debentures of Rs. 100 each at par on 01-01-2001—redeemable on 31-12-2004 at par. The company decided to invest money outside business to provide funds for redeemption. The outside investments were made @ 5% p.a. on the last day of each year. On 31st December, 2004, the company sold all investments for Rs. 7, 25,000 and redeemed the 8% Debentures. The Sinking Fund value of Re 1 @ 5% interest for 4 years is 0.23012. :— 16
* Prepare for all the four years:
1. 8% Debentures Accounts
2. Sinking Fund Account
3. Sinking Fund Investment Account
* Note: Calculations to be rounded off to the nearest rupee.
Q. 9)Answer the following:-
(a) (i)List out the items under the head "Reserves & Surplus" of a company as per Schedule VI requirements.(4)
(ii)State the Steps to calculate value of Goodwill as per capitalization of future Maintainable Profits Method.(4)
* (b)1.A company has balance as under(2)
Security Premium Rs. 1, 00,000
General Reserves Rs. 1, 50,000
Redeemable Preference Share Capital Rs. 5, 00,000
Preference shares are to be redeemed at a premium of 10%. Find out the amount of fresh issue of shares as per company law requirement.
* 2.A company earned a net profit of Rs. 45,000 after debiting all expenses of Rs. 75,000. The sales ratio of Pre-incorporation and Post-incorporation periods is 2: 3. Find out the allocation of Gross Profit amount in pre & post incorporation periods.(2)
* 3.The profits and the weightage assigned to the profits are as follows (2)
Year Profits (Rs.) Weightage
2002 15,000 1
2003 20,000 2
2004 25,000 3
Goodwill should be valued at 21/2, times of purchase of Weighted Average Profit. Find out amount of goodwill.
* 4.A company has Opening balance of Rs. 10, 00,000 in its Fixed Assets Account [W.D.V.]. Accumulated Depreciation was Rs. 6, 00,000. There was an addition of fixed Assets of Rs. 5, 00,000 at the beginning of the year while there was no sale of fixed asset.(2)
Prepare fixed Assets Schedule if the Depreciation is charged for the year @ 15% on original cost.
| Earning: ₹ 4.00/- |
