University of Mumbai 2007 B.A Economics Financial Accounting - Question Paper

Financial Accounting
March 2007
Time: three HoursMarks: 100
NB:
ques. No.1 is compulsory.
ans any other 4 ques. from the rest.
ans any other 4 ques. from the rest.
Q.1 BK Ltd. is formed to takeover 'Bunty Ltd and Kuber Ltd'. Their Balance Sheets on the date of amalgamation are as below: 16
Liabilities Bunty Ltd.Rs. Kuber Ltd.Rs. Assets Bunty Ltd.Rs. Kuber Ltd.Rs.
Share Capital of Goodwill -- 25,000
Rs.10 every Buildings 1,50,000 1,40,000
Equity shares 2,40,000 1,60,000 Machinery 80,000 60,000
11% Preference Shares 1,50,000 1,00,000 Furniture 10,000 5,000
General Reserve 45,000 40,000 Investments 1,40,000 80,000
Profit & loss A/C 30,000 21,000 Debtors 1,65,000 60,000
9% Debentures 1,00,000 1,00,000 Stock 75,000 90,000
Sundry Creditors 60,000 40,000 Cash & Bank 13,000 8,000
Other Liabilities 40,000 24,000 Other Current Assets 20,000 10,000
Preliminary Expenses 12,000 7,000
6,65,000 4,85,000 6,65,000 4,85,000

BK Ltd. issued 10,000 equity shares of Rs.10 every to the public at a premium of 10%.Bunty Ltd. and Kuber Ltd. were taken over by BK Ltd. on the subsequent terms.

Re: Bunty Ltd.
Equity Shareholders are to be issued seven Equity Shares of Rs. 10 at par in BK Ltd. and are to be paid Rs.5 in cash for surrender of every six Shares.
Preference shareholders are to be paid at 10% premium by 12.5% preference shares in BK Ltd. issued at par.
All Assets and liabilities are valued at book value other than Machinery which is valued at 10% beneath book value and Debtors are Debtors are worth Rs. 1,60,000.
Liquidation expenses of Rs.12,500 are to be borne by BK Ltd.
Discharge the debentures of Bunty Ltd. at a discount of 10% by the problem of 13% Debentures of Rs.100 every in BK Ltd.
Re: Kuber Ltd.
Cash Rs.3,000 is to be retained for liquidation expenses.
Debtors and investments are valued at 90% of cost.
Machinery and stock are valued at 10% above cost and other assets and liabilities are valued at book value other than Fictitious assets.
Prefrence shareholders are to be paid at 10% premium by 12.5% prefrence shares in BK Ltd. issued at par.
Balance of Purchase consideration is payable,in equity share at par.
Discharge the debentures of Kuber Ltd. at par by the problem of 13% Debentures of Rs.100 every in 'BK' Ltd.
The Face value of Equity shares and preference shares in BK Ltd. is of Rs.10 every.
Show the necessary Ledger Accounts in the books of 'Bunty Ltd' and Kuber Ltd'.also compute purchase considerations.
Q.2 The subsequent trial balance was extracted from the books of M/s. Jhakharia Pvt. Ltd., which had taken over business of Mr. Vardhan on first April, 2005. The company was incorporated on first July, 2005. However no effect of conversion was provided in the books which continued thereafter. 16

Earning:   Approval pending.