1. | Answer the following questions: | 4x5=20 | |
| (a) | The following information is available for Raja Ltd. for the accounting year 2009–10 and 2010–11: Net profit for | Rs. | Year 2009–10 Year 2010–11 | 25,00,000 40,00,000 | No. of shares outstanding prior to right issue 12,00,000 shares. Right issue | : : : | One new share for each three outstanding i.e. 4,00,000 shares Right issue price Rs. 22 Last date to exercise rights 30–6–2010 | Fair value of one equity share immediately prior to exercise of rights on 30–6–2010 = Rs. 28. You are required to compute the basic earnings per share for the years 2009–10 and 2010–11.∗ | | (0) |
| (b) | Delta Ltd. issued 25,00,000 equity shares of Rs. 10 each at par. 7,00,000 shares were issued to the promoters and the balance offered to the public was underwritten by three underwriters P, Q & R in the ratio of 2 : 3 : 4 with firm underwriting of 50,000, 60,000 and 70,000 shares each respectively. Total subscription received 13,88,000 shares including marked application and excluding firm underwriting. Marked applications were as follows: P Q R | 3,00,000 3,50,000 4,50,000 | Unmarked and surplus applications to be distributed in gross liability ratio. Ascertain the liability of each underwriter. | | (0) |
| (c) | Brahma Limited has three departments and submits the following information for the year ending on 31st March, 2011: Particulars | A | B | C | Total (Rs.) | Purchases (units) Purchases (Amount) Sales (units) Selling price (Rs. per unit) Closing Stock (Units) | 5,000
5,200 40 400 | 10,000
9,800 45 600 | 15,000
15,300 50 700 | 8,40,000 | You are required to prepare departmental trading account of Brahma Limited assuming that the rate of profit on sales is uniform in each case. | | (0) |
| (d) | A Company has its share capital divided into shares of Rs. 10 each. On 1st April 2010, it granted 20,000 employees’ stock options at Rs. 40, when the market price was Rs. 130. The options were to be exercised between 1st January 2011 to 15th March 2011. The employees exercised their options for 18,000 shares only; the remaining options lapsed. The company closes its books on 31st March every year. Pass Journal entries with regard to employees’ stock options. | | (0) |
2. | A and B are partners of AB & Co. sharing profits and losses in the ratio of 2:1 and C and D are partners of CD & Co. sharing profits and losses in the ratio of 3:2. On 1st April 2011, they decided to amalgamate and form a new firm M/s. AD & Co. wherein all the partners of both the firm would be partners sharing profits and losses in the ratio of 2:1:3:2 respectively to A,B,C and D. Their balance sheets on that date were as under: Liabilities | AB & Co. Rs. | CD & Co. Rs. | Assets | AB & Co. Rs. | CD & Co. Rs. | Capitals A B C D Reserve Creditors Due to AB & Co. | 1,50,000 1,00,000
66,000 52,000 |
1,20,000 80,000 54,000 35,000 47,000 | Building Machinery Furniture Stock Debtors Due from CD & Co. Cash at Bank Cash in hand | 75,000 1,20,000 15,000 24,000 65,000 47,000 18,000 4,000 | 90,000 1,00,000 12,000 36,000 78,000
15,000 5,000 | | 3,68,000 | 3,36,000 | | 3,68,000 | 3,36,000 |
The amalgamated firm took over the business on the following terms: (a) | Building was taken over at Rs. 1,00,000 and Rs. 1,25,000 of AB & Co. and CD & Co. respectively. And machinery was taken over at Rs. 1,25,000 and Rs. 1,10,000 of AB & Co. and CD & Co. respectively. | (b) | Goodwill of AB & Co. was worth Rs. 75,000 and that of CD & Co. was worth Rs. 50,000. Goodwill account was not to be opened in the books of the new firm, the adjustments being recorded through capital accounts of the partners. | (c) | Provision for doubtful debts has to be carried forward at Rs. 5,000 in respect of debtors of AB & Co. and Rs. 8,000 in respect of CD & Co. |
You are required : (i) | Compute the adjustments necessary for goodwill. | (ii) | Pass the Journal Entries in the books of AD & Co. assuming that excess/deficit capital (taking D’s capital as base) with reference to share in profits are to be transferred to current accounts. | | 16 | (0) |
3. | The Balance Sheet of X Limited as on 31st March 2011, was as follows: Liabilities | Amount Rs. | Assets | Amount Rs. | Authorised and subscribed capital: 10,000 Equity shares of Rs. 100 each fully paid Unsecured loans: 15% Debentures Accrued interest Current Liabilities: Creditors Provision for income tax | 10,00,000
3,00,000 45,000
52,000 36,000 | Fixed Assets: Machineries Current Assets: Stock Debtors Bank Profit & loss A/c | 3,50,000
2,53,000 2,30,000 20,000 5,80,000 | | 14,33,000 | | 14,33,000 |
It was decided to reconstruct the company for which necessary resolution was passed and sanctions were obtained from the appropriate authorities. Accordingly, it was decided that: (i) | Each share be sub–divided into 10 fully paid up equity share of Rs. 10 each. | (ii) | After sub–division, each shareholder shall surrender to the company 50% of his holding for the purpose of reissue to debentureholders and creditors as necessary. | (iii) | Out of shares surrendered 10,000∗ shares of Rs. 10 each shall be converted into 10% Preference shares of Rs. 10 each fully paid up. | (iv) | The claims of the debentureholders shall be reduced by 50%. In consideration of the reduction, the debentureholder shall receive Preference Shares of Rs. 1,00,000 which are converted out of shares surrendered. | (v) | Creditors claim shall be reduced by 25%. Remaining creditors are to be settled by the issue of equity shares of Rs. 10 each of out of shares surrendered. | (vi) | Balance of Profit and Loss account to be written off. | (vii) | The shares surrendered and not re– issued shall be cancelled. |
Pass Journal Entries giving effect to the above and the resultant Balance Sheet. | 16 | (0) |
4. | (a) | The summarized Balance Sheet of Full Stop Limited as on 31st March 2011, being the date of voluntary winding up is as under: Liabilities | (Rs.) | Assets | (Rs.) | Share capital: 5,000, 10% Cumulative Preference shares of Rs. 100 each fully paid up Equity share capital: 5,000 Equity shares of Rs. 100 each Rs. 60 per share called and paid up 5,000 Equity shares of Rs. 100 each Rs. 50 per share called up and paid up Securities premium 10% Debentures Preferential creditors Bank overdraft Trade creditors |
5,00,000
3,00,000
2,50,000 7,50,000 2,10,000 1,05,000 4,85,000 6,00,000 | Land & building Plant & machinery Stock in trade Book debts Profit & loss account | 5,20,000 7,80,000 3,25,000 10,25,000 5,50,000 | | 32,00,000 | | 32,00,000 |
Preference dividend is in arrears for three years. By 31–03–2011, the assets realized were as follows: | Rs. | Land & building Stock in trade Plant & machinery Book debts | 6,20,000 3,10,000 7,10,000 6,60,000 |
Expenses of liquidation are Rs. 86,000. The remuneration of the liquidator is 2% of the realization of assets. Income tax payable on liquidation is Rs. 67,000. Assuming that the final payments were made on 31–03–2011, prepare the Liquidator’s Statement of Account. | 8 | (0) |
| (b) | XYZ Company is having its Branch at Kolkata. Goods are invoiced to the branch at 20% profit on sale. Branch has been instructed to send all cash daily to head office. All expenses are paid by head office except petty expenses which are met by the Branch Manager. From the following particulars prepare branch account in the books of Head Office. | Rs. | | Rs. | Stock on 1st April 2010 (invoice price) Sundry Debtors on 1st April, 2010
Cash in hand as on 1st April, 2010
Office furniture on 1st April, 2010 Goods invoiced from the head office (invoice price) Goods return to Head Office Goods return by debtors Cash received from debtors Cash Sales Credit sales | 30,000
18,000
800
3,000
1,60,000 2,000 960 60,000 1,00,000 60,000 | Discount allowed to debtors Expenses paid by head office: Rent Salary Stationery & Printing Petty expenses paid by the branch Depreciation to be provided on branch furniture at 10% p.a. Stock on 31st March, 2011 (at invoice price) | 160
1,800 3,200 800
600
28,000 | | 8 | (0) |
|
5. | From the following information prepare the Profit & Loss Account of Jawahar Bank Limited for the year ended 31st March, 2011. Also give necessary Schedules. | Figures are in Rs. thousands | Interest earned on term loans Interest earned on term loans classified as NPA Interest received on term loans classified as NPA Interest on cash credits and overdrafts Interest earned but not received on cash credit and overdraft treated as NPA Interest on deposits Commission Profit on sale of investments Profit on revaluation of investments Income from investments Salaries, bonus and allowances Rent, taxes and lighting Printing and stationary Director’s fees, allowances expenses Law charges Repairs and maintenance Insurance Other information: Make necessary provision on risk assets: (i) Sub–standard (ii) Doubtful for one year (iii) Doubtful for two years (iv) Loss assets Investments | 17.26 4.52 2.04 38.54
8.39 27.20 1.97 11.76 2.76 15.53 18.75 1.70 0.75 1.33 0.22 0.18 0.30
15.00 7.00 2.40 0.65 3700 |
Bank should not keep more than 25% of its investments as ‘held–for–maturity’ investment. The market value of its best 75% investments is Rs. 9,00,000 as on 31st March, 2011. | 16 | (0) |
6. | (a) | Lessee Ltd. took a machine on lease from Lessor Ltd., the fair value being Rs. 7,00,000. The economic life of machine as well as the lease term is 3 years. At the end of each year Lessee Ltd. pays Rs. 3,00,000. The Lessee has guaranteed a residual value of Rs. 22,000 on expiry of the lease to the Lessor. However Lessor Ltd., estimates that the residual value of the machinery will be only Rs. 15,000. The implicit rate of return is 15% p.a. and present value factors at 15% are 0.869, 0.756 and 0.657 at the end of first, second and third years respectively. Calculate the value of machinery to be considered by Lessee Ltd. and the finance charges in each year. | 8 | (0) |
| (b) | Modern Insurance Company’s Fire Insurance division provide the following information, show the amount of claim as it would appear in the Revenue Account for the year ended 31st March, 2011. | Direct Business | Re–insurance | | Rs. | Rs. | Claim paid during the year Claim received Claim payable 1st April, 2010 31st March, 2011 Claim receivable: 1st April, 2010 31st March, 2011 Expenses of management (Includes Rs. 38,000 Surveyor’s fee and Rs. 42,000 Legal expenses for settlement of claims) | 35,30,000
8,23,000 8,75,000
– – 3,45,000 | 8,20,000 3,20,000
58,000 87,000
85,000 1,42,000 | | 8 | (0) |
7. | Answer any four of the following: | 4x4=16 | |
| (a) | XYZ Ltd. had issued 30,000, 15% convertible debentures of Rs. 100 each on 1st April, 2008. The debentures are due for redemption on 1st March, 2011. The terms of issue of debentures provided that they were redeemable at a premium of 5% and also conferred option to the debentureholders to convert 20% of their holding into equity shares (Nominal Value Rs. 10) at a price of Rs. 15 per share. Debentureholders holding 2500 debentures did not exercise the option. Calculate the number of equity shares to be allotted to the Debentureholders exercising the option to the maximum. | | (0) |
| (b) | Siva Limited received a grant of Rs. 1,500 lakhs during the last accounting year (2009–10) from Government for welfare activities to be carried on by the company for its employees. The grant prescribed conditions for its utilization. However during the year 2010–11, it was found that the conditions of the grant were not complied with and the grant had to be refunded to the Government in full. Elucidate the current accounting treatment with reference to the provisions of AS–12. | | (0) |
| (c) | Carrying amount of a machine is Rs. 1,00,000 (Historical cost less depreciation). The machine is expected to generate Rs. 25,000 net cash flow for 5 years. The net realizable value (or net selling price) of the machine on current date is Rs. 85,000. The enterprises required rate of earning is 10% p.a. State the value at which the enterprise should carry its machine. The present value factors at 10% are 0.909, 0.826, 0.751, 0.683 and 0.621 at the end of first, second, third, fourth and fifth year respectively. | | (0) |
| (d) | A company signed an agreement with the employees’ union on 01–09–2010 for revision of wages with retrospective effect from 01–04–2009. This would cost the company an additional liability of Rs. 10 lakhs per annum. Is a disclosure necessary for the amount paid in 2010–11. | | (0) |
| (e) | Why goods are marked on invoice price by the head office while sending goods to the branch? | | (0) |