ST.

JOSEPH’S COLLEGE OF ARTS AND SCIENCE (AUTONOMOUS)

CUDDALORE -1
SEMESTER EXAMINATION- DECEMBER-2020
CLASS: II- B. Com A (Shift –I & Shift- II) Mail ID: apsjc2020@gmail.com
SUBJECT: CORPORATE ACCOUNTING – I
SUBJECT CODE: CM305P
DATE:18.12.2020
TIME: 10.00 AM to 1.00 PM MARK: 75
Section-A (10x2=20)
Answer ALL Question

1. Define a Share?
2. Define a Debenture?
3. What is meant by Acquisition of business?
4. What is Forfeiture of Share?
5. What is Capital redemption reserve?
6. How do you calculate Time & Sales ratio?
7. Define Current Assets?
8. What are Tangible Assets?
9. Define the term dividend?
10. What do you mean by Redemption of shares?

Section-B (5x5=25)
Answer any Five Question
11. Write about the salient features of Company
12. The Bangalore bottling co ltd., issued a prospectus inviting applications for 100000 equity
shares of rs.10 each, payable as Rs .2 on application, Rs. 3 on allotment and the balance at
the discretion of the directors. Applications for 120000 shares were received. The directors
allotted the shares as follows:

To applicants of 80000 shares – Full allotted

To applicants of 30000 shares – 20000 shares

To applicants of 10000 shares –Nil

Give journal entries, assuming that the entire sum due on allotment has been received and no
call has been made.

13. A company has 10,000 9% redeemable preference shares of Rs 100 each fully paid. The
company decides to redeem the share on 31 st Dec. 1997 at premium of 10%. The
company makes the following issues:
 (i) 6,000 equity shares of Rs. 100 each at premium of 10%

(ii) 4,000 8% Debenture of Rs. 100 each

The issue was fully subscribed and allotments were made. The redemption was duly
carried out. The company has sufficient profit. You are required to give the
necessary entries
14. CM & co which was run by Muthu and Krishnan was taken over by Anna Ltd. On 31st
Dec 1985. The Balance sheet of Tamil Nadu & co. was as follows:

Liabilities Rs Assets Rs

Bill payable 3,700 Bank 2,500

Creditors 12,650 Stock 19,700
General reserve 5,000 Debtors 13,650
Capital account: Typewriter 1,250
Muthu 28,250 Furniture 2,300
Krishnan 15,200 Machinery 22,400
Good will 3,000

64,800 64,800

The company takes over assets and liabilities. The purchase consideration was agreed at Rs.
40,830 Out of this Rs. 33,000 in equity shares of Rs. 100 each at 10% premium and for the balance
cash is to be given. Anna Ltd. Valued the stock and typewriter at 10% and 20% respectively less
than the book value. Machinery was valued at Rs. 25,000.
Give Journal entries in the books of the purchasing companying.
15. Raja ltd. was incorporated on 1-7-94, which took over a running concern with effect from

1-1-94. The sales for the period up to 1-7-94 was Rs. 2, 70,000 and the sales form 1-7-94
to 31-12-94 amounted to Rs. 3, 30,000
The expenses debited to profit & loss account included:

A) Directors fee 15,000

B) Bad debts 1,800

C) Advertisement (Rs.500 per month) 6,000

D) Salaries and general expenses 32,000

 E) Preliminary expenses written off 3,000

F) The Gross profit was (1-1-94 to 31-12-94) 2,40,000

Ascertain the profit prior to incorporation

. 16. From the following particulars, ascertain Profit prior to and after incorporation

A) Time Ratio – 3:5

B) Sales Ratio – 4:6

C) Gross Profit –10,00,000

D) Expenses debited to Profit and Loss A/C were:

Salaries 96,000

General expenses 12,000

Discount on sales 40,000

Advertisement 50,000

Preliminary expenses 70,000

Rent & Tares 15,000

Printing & Stationary 65,000

E) Income credited to profit and loss account were

Rent received 18,000

Interest received 50,000

17. Mukesh And co. ltd was registered on 1-1-1999 to buy the business of M/s. Mukesh bros.
as on 1-10-1998 and obtained the certain of commencement of business on 1-2-99. The
accounts of the company for the period of 12 months ended 30-9-1999 disclosed the Net
profit of Rs 1,25,000 after having charged the following amount:
Salary: Rs 30,000 (There were 4 employees in the pre incorporation period and 7 in post
incorporation period)

Wages: Rs. 10,920 (There were 4 workers in the pre incorporation period and 5 in the post
incorporation period and the rate of wages were Rs. 160 and Rs.200 per month per worker in
the pre- and post-incorporation period respectively)
 Sales: Rs.4,80,000 of which Rs. 80,000 related to pre incorporation period.

Director fee: Rs 16,000

You are required to calculate profit for pre- and post-incorporation period separately.

18. The following balances have been extracted from the book of Rama ltd. As on 31-march
2013
Share capital Rs.10,00,000

12% Debentures Rs.5,00,000

Proposed dividend Rs.50,000

Machinery Rs.9,00,000

Surplus i.e., balance in Statement of profit and loss (Dr.) Rs.50,000

Securities premium Rs.1,00,000

Trade payable (creditors) Rs.2,00,000

Govt. Bonds Rs.4,00,000

Cash and cash equivalents Rs.1,00,000

Prepare the balance sheet of the company as per Revised Schedule VI, part I of the
companies Act 1956.

PART - C
Answer any THREE questions (3x10 = 30)
19. Explain the different schedules in the balance sheet of the company as per Revised
Schedule VI.
20. NP Ltd. was formed with an authorized capital of Rs.12,00,000 divided into equity shares
of Rs.10 each, to acquire the business of ‘A’ and ‘P’ whose balance sheet on the date of
acquisition was as follows:
Liabilities Rs. Assets Rs.

Capital 6,00,000 Freehold premises 7,00,000

General reserve 4,00,000 Stock 2,00,000
Sundry creditors 2,00,000 Sundry debtors 1,60,000
Less: Provision for
bad debts 10,000 1,50,000
12,00,000 Cash at Bank 1,50,000
12,00,000
The purchase consideration was agreed upon at Rs.14, 00,000 to be paid in Rs.12, 00,000 fully
paid equity shares at Rs.11 and the balance in cash.

Give journal entries to record the above and prepare the Balance Sheet of AR ltd. assuming the
vendor’s account is finally settled.

21. A., ltd, issued for public subscription 20000 shares of Rs 10 each at a premium of
Rs.2 per share payable as under:

Rs. 2 per share on application

Rs. 5 per share on allotment (including premium)
Rs.2 Per share on first call
Rs. 3 per share on final call.
Applications for 30000 shares were received. Allotment was made pro-rata to the
applicants for 24000shares, the remaining applications being rejected. Money over paid
was used towards Allotment.

‘B’ to whom 800 shares were allotted failed to pay the allotment money, 1st and 2nd calls
and ‘C’ to whom 1000 shares were allotted failed to pay the last two calls.

These shares were subsequently forfeited after the 2nd call was made. All these forfeited
shares were reissued to ‘w’ as fully paid at Rs. 8 per share.

Give journal entries to record the above transaction and prepare the balance sheet.

22. Big bulls Ltd. Has a nominal capital of Rs.6,00,000 divided into share of Rs.10 each. The
following trial balance is extracted from the books of the company as on 31.12.1987.
Rs. Rs.

Calls in arrear 7,500 6% debentures 3,00,000

Premises(Rs.60000 added 3,60,000 P&L A/c (1.1.87) 14,500

on 1.7.1987)

Machinery 3,00,000 General reserve 25,000

Interim dividend paid 7,500 Creditors 50,000

Purchases 1,85,000 Sales 4,15,000

Preliminary expenses 5,000 Share capital (called up) 4,60,000

Freight 13,100 Bills payable 38,000

Directors fees 5,740 Provision for bad debts 3,500

Bad debts 2,110

4% government securities 60,000

Stock(1.1.87) 75,000

Furniture 7,200

Sundry debtors 87,000

Goodwill 25,000

Cash 750

Bank 39,900

Wages 84,800

General expenses 16,900

Salaries 14,500

Debenture interest 9,000

13,06,000 13,06,000

Prepare final accounts of the company for the year ending 31.12.87 in the prescribed form after
taking into account the following adjustments:

(a) Depreciate machinery by 10% and furniture by 5%

(b) Written off preliminary expenses
(c) Wages include Rs.1,00,000 paid for the construction of a compound wall to the premises
and no adjustment was made.
(d) Provide 5% for bad debt on sundry debtors.
(e) Transfer Rs.10,000 to general reserve.
(f) Provide for income tax Rs.25,000.
(g) Stock on 31.12.87 was Rs.1,01,000.
23. S&R Co. Ltd., was incorporated on July 1,1992 to purchase the business of Nisha Bros., as
on 1-4-92. Certificate of commencement of business was received on 1-8-92. The account
for the year ended 31-3-93 disclosed net profit of Rs.80,000 after charging the following:
(1) Directors salary- Rs.10,000
(2) Salaries- Rs.20,000 (4 employees in pre incorporation period and 6employees in post
incorporation period).
(3) Wages- Rs.10,200 (5 workers at Rs.80 per month in pre incorporation period and 10
workers at Rs.100 per month in post incorporation period).
The sales were Rs.3,00,000 of which Rs.75,000 were in pre incorporation period.

Calculate profit earned in the pre- and post-incorporation periods.