Corporate Accounting 2021 Question paper

lll Semester B.Com. Examination, April/May 2021

(CBCS) (2015 - 16 and Onwards) (F+H)

COMMERCE 3.3 : Corporate Accounting

Time : 3 Hours Max' Marks I 7

L) instruction : Answer should be written completely either in English ar in Kannada.

SECTION -A

1 . Answer any five sub-questions. Each sub-question carries two marks. (5 x 2=10)

a) Give the meaning of underwriting.

b) What is the partial underwriting ?

c) Mention the Ratios required to calculate profit prior to incorporation.

d) State any 4 factors determining the value of Goodwill.

e) How do you calculate intrinsic value of shares ?

f) State under what heading the following items will appear in the Balance Sheet of a company.

i) Calls unpaid ii) Loose tools.

g) What is the fair value of shares ?

SECTION - B

Answer any 3 questions. Each question carries 6 marks. (6 x 3=18)

2. Ganesh Co. Ltd. issued 50,000 shares of Rs.10 each. The whole issue was fully under written by ABC and D as follows.

A - 20,000 shares B - 15,000 shares

C - 5,000 shares and D - 10,000 shares

The company received applications for 45,000 shares of which marked applications were as follows.

A- 22,000 shares, B - 11,000 shares,

C - 1,000 shares and . D-9,000 shares.

Determine the liability of each underwriter.

3. Shiva Ltd. had purchased a business on 1.4.2019. The company received its certificate of incorporation on 1 .9.2019. The average monthly sales for the period , before incorporation was 25% more than the average monthly sales for the period after incorporation. The total sales during the year was Rs. 26,50,000.

Ascertain :

i) Time Ratio

ii) Sales Ratio

iii) Pre and post incorporation sales.

4. From the following information calculate the Value of Goodwill under

, i) 3 year purchase of super profit method.

ii) Capitalisation of super profit method.

a) Average capital employed - Rs. 4,35,000

b) Net profit of the firm for the past 3 years were Rs 61,000 ,Rs.49, 250 and Rs.87,750

c) Managerial remuneration of employed Elsewhere Rs. 9,000 p.a.

d) Normal rate of return 8%.

5. From the following particulars of Karunya Ltd., compute the value of shares under Yield Method.

a) Equity shares of Rs.10 each.

b) Profit for the last 3 years Rs 75,000, Rs 78,000 and Rs 87,000

c) 20 % is transferred to Reserve.

d) Normal rate of return - 10%.

6. Under which heading would you show the following in company final account

a) Provision for taxation b) Underwriting commission

c) Work in progress d) Pension fund

e) Loan to employees f) Unclaimed dividend.

SECTION -C

Answer any 3 questions. Each question carries 14 marks. (3x14=41

7. A Ltd. Co. issued 1 ,00,000 equity shares of Rs. 100 each. M,N,O and p underwrites the entire issue in the proportion of 30%, 30%,20% and 20% respectively. They also apply for firm share application as follows.

M - 3,000 shares N - 2,000 shares

O - 2,000 shares and P -3,000 shares.

Asides the firm application, the public apply for 60,000 shares of which marked applications are as follows

M - 10,000 shares N - 6,000 shares

O - 8,000 shares and P - 16,000 shares.

calculate the Net Liability of each underwriter treating

i) Firm underwriting as marked application.

ii) Firm underwriting as unmarked application.

8. 'A' Ltd. took over the business of B on 1.4.2019 and it was incorporated on 1.7.2019. The P/L A/c of 'A' Ltd. on 31.3.2020 was as follows.

Particulars Rupees Particulars Rupees

To Commission (sales) 5,250 By Gross profit 1,96,000

To Advertisement 10,500 By Bad debts recovered 1,000

To M.D. Remuneration 18,000

To Depreciation 5,600

To Salaries 36,000

To insurance 1,200

To Preliminary Expenses w/o 1,400

To Rent and taxes 6,000

To Discount 700

To Bad debts 2,500

To Net profit 1,09,850

1,97,000 ' 1,97,000

Further details :

a) The average monthly sales after incorporation was twice the average monthly sales before.

b) Rent which was paid for the first 3 months at Rs. 400 P.M. increased by Rs.100 per month for the balance of period.

c) Bad debts of Rs. 350 related only to the period after 1.9.2019 and the Balance related to the sales made up to 1 .9.2019.

d) The Bad debts realised belong to the bad debts which were written off in 2019-20.

Find out the profit before and after incorporation.

9. The B/S of Divya Co. Ltd. as on 31.3.2020 is as under.

Liabilities Rupees Assets Rupees

6,000 pre shares of Rs.100each 6,00,000 Fixed assets 10,00,000

Stock 3,50,000

10,000 Eq. shares of Rs.100 each 10,00,000 Debtors 4,50,000

Cash at Bank 2,00,000

General reserve ,: 80,000

P/L A/c 1,60,000

S. Creditors 1,60,000

20,00,000 20,00,000

The profit of the company (before providing for tax 40%) and the rate of dividend declared in respect of the last 5 financial year are as follows.

Year Profit Rate of dividend

2015 - 16 2,70,000 8%

2016 - 17 3,10,000 10%

2017 - 18 3,40,000 12%

2018 - 19 3,30,000 15%

2019 - 20 3,60,000 15% ,

You are required to find out the value of Goodwill of the company on the basis of

a) 5 years purchase of super profits.

b) Capitalisation of super profit method.

c) As per annuity of super profit taking P.V of annuity of Re. 1.00 for 5 years at 10 % is as 3.78.

10. On 31.3.2020 the Balance sheet of Jagadish Ltd. was as follows.

Liabilities Rs. Assets Rs.

5,000 shares of Rs.100 each 5,00,000 Land and Building 2,20,000

P/L A/c 1,03,000 Plant and Machinery 95,000

Bank over draft 20,000 Stock 3,50,000

Creditor,s 77,000 Debtors 1,55,000

Provision for tax 45,000

Provision for dividend 75,000

8,20,000 8,20,000

The 5 years net profit of the company after deducting all working charges and providing for depreciation and taxation were as under.

2016 - Rs.85,000 2017 -Rs. 96,000 2018-Rs.90,000

2019-Rs. 1,00,000 and 2020=Rs.95000

on 31.3.2020 Land and Building was revalued at Rs. 2,50,000. Plant and Machinery at Rs.

1,50,000 and Goodwill at Rs.1,50,000. The normal rate of return is 10%.

You are required to ascertain the value of equity shares under

a) Intrinsic value method b) Yield value method c) Fair value method.

11. Following are the B/S of Karunya Ltd. as on 31.3.2020. You are required to prepare Final Account of the company after taking additional information into consideration

Debits Rupees Credits Rupees

Premises 30,72,000 Share capital 40,00,000

Plant 33,00,000 12% debenture 30,00,000

Stock on 1.4.2019 7,50,000 P/L A/c 2,62,500

Debtors 8,70,000 Creditors 7,70,000

Good will 2,50,000 Sales 41,50,000

Bank balance 4,06,500 General Reserve 2,50,000

Calls in arrears 75,000 R.D.D. as on 1.4.2019 35,000

lnterim Dividend 3,92,500

Purchases ' 18,50,000

Preliminary expenses ' 50,000

Wages 9,79,800