University of Mumbai 2006 B.A Economics Financial Accounting - Question Paper

Patents & Trade Marks 40,000
16,80,000 16,80,000

Note: Preference dividend is in arrears for 3 years.
The subsequent scheme of reconstruction was prepared and duly approved by the court.
The Preference Shares shall be converted into equal Number of 9% Preference Shares of Rs. 50 every.
The equity shares shall be decreased to Rs. three every. However the face value will remain the identical.
5% Debentures shall be converted into equal number of 6% Debenture, of Rs. 75 every. The debenture holders also agreed to waive 50% of the accrued interest.
Arrears of preference dividend are to be decreased to 1 year's dividend which is paid in cash.
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.
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

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 subsequent 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 every. 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 every and the balance in the form of debentures of Rs. 100 every. :— 16
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

If is further informed that:
Closing stock is valued at Rs. 11,200.
Fixed Assets include furniture of Rs. 10,000 purchased on 01-10-2004; Depreciation is to be charged on Fixed Assets @ 10% p.a.

Earning:   Approval pending.