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

The Debenture holders to take over plant and machinery at Rs. 6, 50,000/- in part satisfaction of their claim. The remaining claim should be converted into 14% debentures.
Creditors agreed to decrease their claim by Rs. 20,000/-. Bills payable to be paid immediately.
Goodwill, Patents, Profit and Loss A/c and Preliminary Expenses are to be written off entirely.
The subsequent assets are to be revalued as under Furniture Rs. 25,000/-, Stock-In-Trade Rs. 68,000/- Land and Building Rs. 5, 80,000/- Sundry Debtors Rs. 80,000/-.
A Secured Loan of Rs. 1,50,000/- at 12% per annum is to be found by mortgaging Land and Building for repayment of bank overdraft, bills payable and reconstruction expenses Rs. 15,000/-.

Pass journal entries to record above scheme and draft the balance sheet of Sandeep Limited after reconstruction.

Q.4 'Piyusha' Limited furnishes the subsequent info and requests you to obtain out the value of on the basis of capitalisation of Future Maintainable Profits method 16
(a) Balance Sheet as on 31st March, 2006:
Liabilities Rs. Assets Rs.
Share Capital Goodwill 60,000
7,500 equity shares Land & Machinery 7,00,000
of Rs. 100/- every 7,50,000 Plant & Machinery 2,50,000
Reserves 10% Investments 4,50,000
Profit & Loss A/c 3,50,000 Debtors 2,60,000
Capital Reserve 1,50,000 Stock-In-Trade 2,40,000
Workmen Compensation Fund 3,00,000 Cash and Bank 1,30,000
10% Debentures 3,00,000 Other Current Assets 1,10,000
Creditors 2,30,000 Preliminary Expenses 20,000
Other Current Liabilities 1,40,000
22,20,000 22,20,000

(b) In similar business normal returns on capital employed is 15% (After Tax)
(c) All Investments are Non-Trade Investments.
(d) Profits for last 4 years before tax are follows.
Year ending 31st March, 2003 Rs. 4, 32,000
Year ending 31st March, 2004 Rs. 4, 46,000
Year ending 31st March, 2005 Rs. 4, 36,000
Year ending 31st March, 2006 Rs. 4, 53,000
(e) An avg. rate of 40% is payable as Income Tax.
(f) In the year 2003-04, there was a fire which resulted in a loss of Rs. 25,000/- and during theYear 2004-05 the company had sold its furniture resulting into a profit of Rs. 40,000/-
(g) The modifications expected from ensuing year are:
Increase in Directors' fees @ Rs. 12,000/- per annum.
Reduction in Advertisement Expenses @ Rs. 42,000/- p.a.
Increase in Distribution Expenses @ Rs. 48,000/- p.a.

Earning:   Approval pending.