CS Inter :: Company accounts and Cost & Mangaement accounts : December 2004

At a meeting of the shareholders held on the date of the above stated balance sheet, the following decisions were taken :

What are the different circumstances under which valuation of shares becomes necessary ?

Futuristic India Ltd. has a part of its share capital in the form of 10,000, 9% redeemable preference shares of Rs.100 each repayable at a premium of 10%. Now the shares are fully ready for redemption, it has been decided that the whole amount would be redeemed by way of a fresh issue of 1,00,000 equity shares of Rs.10 each at a premium of Rs.15 each.
Show necessary journal entries assuming that the whole amount is received in cash and 9% preference shares are redeemed.

Best Life Insurance Co. Ltd. had a paid-up capital of Rs.10,00,000 divided into 1,00,000 shares of Rs.10 each. Its net liability on all contracts in force as on 31st March, 2004 was Rs.96,00,000 and on 31st March, 2003, this liability was Rs.84,00,000. The company has paid an interim bonus of Rs.2,60,000 and 20% of the surplus is to be allocated to shareholders, 20% to reserves and balance being carried forward. The following figures are extracted from the books of the company for the year ended 31st March, 2004 :

	Rs.		Rs.
Premium less   re-insurance premium Interest, dividend and rent Fees Income-tax Management expenses Annuities paid Commission	57,20,000 28,00,000 16,000 4,40,000 7,00,000 50,000 2,20,000	Surrenders Surplus on revaluation   of reversions Re-insurance irrecoverable Claims less   re-insurance claims Consideration for   annuities granted	3,20,000 20,000 16,000 34,00,000 1,60,000

Cybertech Ltd. issued 1,00,000 shares for public subscription and these were underwritten by A, B and C in the ratio of 25%, 30% and 45% respectively. Applications were received for 80,000 shares and of these applications for 16,000 shares had the stamp of A, those for 20,000 shares had the stamp of B and those of 24,000 shares had the stamp of C. The remaining applications did not bear any stamp.
On the basis of above information, work out the liability of the individual underwriters.

In 1999, Gem Ltd. issued 10% Rs.20,00,000 debentures at a discount of 10%, the debentures were redeemable in 2004. In 2004, the company gave the debentureholders the option of converting the debentures into equity shares of face value of Rs.10 at a premium of 25%. One debentureholder holding Rs.4,00,000 debentures wants to exercise the option. What is the face value of the shares that he will get ?

The following are the balance sheets of Vijay Ltd. and Jyoti Ltd. as on 31st March, 2004 :

Balance Sheets as on 31st March, 2004
Liabilities	Vijay Ltd. (Rs.)	Jyoti Ltd. (Rs.)
Share capital :   10% Preference shares of Rs.10 each   Equity shares of Rs.10 each General reserve Profit and loss account 12% Debentures of Rs.100 each Proposed dividend :   On equity shares   On preference shares Debentures interest accrued Sundry creditors	— 30,00,000 10,00,000 5,00,000 — 3,00,000 — — 12,50,000	8,00,000 10,00,000 4,50,000 4,00,000 2,00,000 1,00,000 80,000 24,000 5,00,000
	60,50,000	35,54,000
Assets
Fixed assets Investmetns :   60,000 Equity shares in Jyothi Ltd.   60,000 Preference shares in Jyothi Ltd.   1,000, 12% Debentures in Jyothi Ltd. Current assets	25,00,000 12,00,000 6,00,000 1,00,000 16,50,000	22,00,000 — — — 13,54,000
	60,50,000	35,54,000

Prepare the consolidated balance sheet of Vijay Ltd. with its subsidiary Jyoti Ltd. as on 31st March, 2004.

You are required to prepare a budget for production levels of 6,000, 7,000 and 8,000 units respectively, showing distinctly marginal cost and total cost.

A factory working for 50 hours in a week employs 100 workers on a job work. The standard rate is Rs.20 per hour and standard output is 200 units per gang hour. During a week in April, 10 employees were paid at Rs.16 per hour and 5 employees at Rs.24 per hour. Rest of the employees were paid at standard rate. Actual number of units produced was10,200. Calculate all labour cost variances.

From the following balance sheets of Winners Ltd. for years ended 31st March, 2003 and 2004, prepare a cash flow statement :

Liabilities	31.03.2003 (Rs.)		31.03.2004 (Rs.)
Equity shares of Rs.100 each Securities premium Profit and loss appropriation account Profit for the year 9% Debentures Sundry creditors Provision for taxation Proposed dividend	9,00,000 — 3,00,000 50,000 4,00,000 4,05,000 1,50,000 45,000		12,00,000 90,000 3,00,000 6,00,000 3,00,000 2,30,000 3,00,000 1,00,000
		22,50,000		31,20,000
Assets		31.03.2003 (Rs.)		31.03.2004 (Rs.)
Land Plant and machinery Less: depreciation Loans to subsidiary company Share in subsidiary company Stock in trade Debtors Bank	12,00,000 4,20,000	6,00,000 7,80,000 50,000 60,000 3,70,000 3,00,000 90,000	13,50,000 4,50,000	7,50,000 9,00,000 — 60,000 4,50,000 4,00,000 5,60,000
		22,50,000		31,20,000

The profit volume ratio of Ulysis Manufacturers Ltd. is 40% and the margin of safety is also 40%. Work out the following, if the sales volume is Rs.1.50 crore :

(i)	break-even point;
(ii)	net profit;
(iii)	fixed cost; and
(iv)	sales required to earn a profit of Rs.30 lakh.

The audited financial accounts of a company showed a profit of Rs.59,660, whereas the profit as per the cost accounts was Rs.26,725. From the following information provided, you are required to prepare a reconciliation statement clearly bringing out the reasons for the difference between the two figures :
 

Profit and Loss Account for the Year ended 31st March, 2004
Dr.		(Rs.)		Cr. (Rs.)
OPening stock Purchases Closing stock Direct wages Factory overheads Gross profit (c/d)	24,70,000 8,20,000 32,90,000 7,50,000	25,40,000 2,30,000 4,05,500 2,89,500	Sales	34,65,000
		34,65,000		34,65,000
Administrative overheads Selling overheads Net profit	98,000 1,34,340 59,660		Gross profit(b/d) Dividends received	2,89,500 2,500
		2,92,000		2,92,000

Sundaram Chemicals Ltd. runs a chemical process which produces four products P, Q, R and S from a basic ingredient. The company’s monthly budget is given below :

	Rs.
Raw materials consumption Initial processing wages Initial processing overheads	87,600 81,200 1,62,400

The company sells out Product-S at the point of split-off without further processing. The remaining products are processed further and sold as above. It has been brought to the notice of management that it would be possible to sell all the four products at the split-off points without further processing and in such a case, the selling prices would be as under :
 

Product	P	Q	R	S
Selling Price per Kg.(Rs.)	5.00	36.00	8.00	30.00

For this purpose, the joint costs are to be apportioned on the basis of sales value realised at the split-off point.