Corporate Accounting Paper- I Sem- III Question Bank
VIVEKANAND
COLLEGE KOLHAPUR (AUTONOMOUS)
B.Com-
II Sem- I
CORPORATE
ACCOUNTING PAPER- I
QUESTION
BANK
Module-
I A) Issue and forfeiture of shares, Re-issue of forfeited shares
B) Issue & Redemption of
Debentures (sinking fund method only)
Ø PROBLEMS ON PART A
Problem 1. Krishna Industries Ltd. Issued
prospectus inviting applications for 12,000 shares of Rs. 100 each at a premium
of Rs. 20 each payable as follows:
On application Rs. 20
On allotment Rs. 50 (including premium)
On first call Rs.30
On final call Rs. 20
Applications were received for 18,000 shares and
allotment made pro-rata to the application of 14,400 shares. Money over paid on
application was employed on account of sum due on allotment and excess money
refunded.
Mr. Rahul the holder of 360 shares failed to pay
first and second call and his shares were forfeited after final call. The
forfeited shares were sold to Mr. Ajit as fully paid for Rs. 70 each.
Journalise the transactions
in the books of Krishna Ltd (8
Marks)
Problem 2. Maharashtra Transport Co. Ltd
invited application for 40,000 equity shares of Rs. 100 each at a discount of
Rs. 4par share. The amount was to be paid as follows:
On application Rs. 20
On application Rs. 36
On first and final call Rs.40
The public applied for 36,000 shares and these were
allotted. All money due were Collected with the exception of the first and
final call on 4,000 shares and these were forfeited 2,000 of these shares were
re-issued as fully paid for a payment of Rs. 80 per share.
Journalise the transactions in the books of the
Company (8 Marks)
Problem 3. Ajit Steel Ltd issued for subscription 2000 shares of
Rs. 100 each at a premium of Rs. 20 per share payable as under:
On Application Rs. 20
On Allotment Rs. 50
(including Premium)
On First Call Rs. 20
On Final Call Rs. 30
Applications
were received for 3,000 shares, 2,000 shares allotted in application for 2,400
shares. The remaining applications for 600 shares being refused and application
money was refunded. Excess money received adjusted against allotment. All the
amounts were duly received except from Mr. Rajaram to whom 80 shares were
reissued to Mr. Shivaji as fully paid at Rs. 80per share.
Jounalise
the transactions in the books of the company (8 Marks)
Problem 4. XYZ
Ltd. Having an authorized capital of 4,000 equity shares of Rs. 20/-each.Issued
3,000 Equity shares at Rs 24/- each. The applications were received for 4,000
shares. The amounts were called as under:
Application
money Rs. 5
Allotment
money Rs. 10(including premium)
First
call money Rs. 5
Second
call money Rs. 4
The Directors refunded the money on 400
shares and adjusted that on 600 shares toward the allotment money due. All the
amounts were received except the following :
Mr. Amar holding 100 shares failed to
pay first and final call.
Mr. Bhagwan holding 200 shares did not
pay final call.
The Directors forfeited the shares held
by Mr. Amar and Bhagwan and reissued
them at Rs. 16 per share as fully paid.
Pass journal entries in the books of XYZ
Ltd.
(8 Marks)
Problem
5.
Ravi
Industries Ltd. Was registered with Nominal capital of Rs.5,00,000 divided into
50,000 Equity shares of Rs. 10 each. The company issued 25,000 shares of Rs. 10
each payable as under:
Rs.2.50 on application
Rs.3.00 on allotment
Rs.2.00 on first call
Rs.2.50 on final call
The applications were received for 30,000 shares and
the pro-rata allotment was made. All the amount due was received on allotment
with the exception of Mr. Rajiv who was allotted 200 shares. The first call was
made subsequently and amounts were received as follows:
1) Mr. Raju did not pay the first call.
2) Mr. Mahendra who was allotted 400 shares paid the
entire amount due on his shares along with allotment money.
The Directors forfeited the shares allotted to Mr.
Raju and reallotted them to Mr. Sanju at Rs.5 per share. (Final call is not so
far made)
Pass necessary journal entries in the books of Ravi
Industries Ltd.
(8 Marks)
Ø PROBLEMS ON PART B
Problem
1. ABC
Ltd. issued 500 4% Debentures of Rs. 100 each repayable at the end of 10th
year. Pass the entries in the books of ABC Ltd. presuming that:
a) They were issued at 5% discount and repayable at
par.
b) They were issued at par and repayable at premium
of 4%.
c) They were issued at 5% discount and repayable at
4% premium.
d) They were issued at 5% premium and repayable at
par.
Problem 2. XYZ
Ltd. issued on 1st April 2015 Rs. 1,00,000 8% debentures at 5% discount and repayable at
the end of 10th year at a premium of 4%. The sinking fund was
created by transferring Rs. 10,000 from profit and it was invested in 10%
government securities. Accounts are closed on 31st March every year,
show-
i) Sinking fund account
ii) Sinking fund investment account
iii) Interest on sinking fund investment account and
show journal entry of issue of debentures also.
Problem
3. The
Rahul industries Ltd. has issued on 1-4-2013 8% Debentures for Rs. 5,00,000.
The debentures were issued at a discount of 2% and they were redeemable at a
premium of 5% after 5 years at the option of the company.
It was decided to create a sinking fund by transfer
of Rs. 1,00,000 every year from appropriation account. An equal amount was to
be invested in 8.5% government securities at the end of every year. The
interest was payable on 31st March every year.
Give journal entries in the books of the company for
first three years assuming that the accounts are closed on 31st
March every year.
Problem
4. Ichalkaranji
Weavers Limited issued 5% debentures of Rs. 4,00,000 on 31st March
2014. The Debentures are to be redeemed out of the profits of the company by
transferring Rs. 40,000 p.a. commencing from 31st March 2015, to a
reserve which was invested in 5% Government of Maharashtra loan without any
interval.
You are required to write Debenture Redemption Fund
Account, Debenture Redemption Fund Investments A/c for two years ending 31st
March 2016.
Problem
5. Guruprasad
Company Limited has issued 6% Debentures of RS. 6,00,000. It proposes to create
a Debenture Redemption fund for the purpose of repaying the loan, by setting
aside Rs. 30,000 out of profits and invest the amount in 10% government
securities.
Prepare Debentures Redemption Fund Account and
Debenture Redemption Fund Investment Account for the first three years.
v Short
Notes:
A) Issue and forfeiture of shares, Re-issue of forfeited
shares
1. Meaning
and types of company
2. Share
and types of share
3. Share
capital
4. Shares
issued at premium and discount
5. Forfeiture
of Shares
6. Pro-
rata Allotment
B)
Issue
& Redemption of Debentures (sinking fund method only)
1. Difference
between Shares and Debentures
2. Types
or Classification of Debentures
3. Redemption
of Debentures
4. Sinking fund for Redemption of Debentures
Module- II Company Final Account
Problem 1. Ajit
trading company Ltd., was registered with nominal capital of Rs. 12,00,000
divided into equity shares of Rs. 100 each. Following are the balances
extracted from its books on 31st March 2014.
|
Particulars |
Rs. |
|
Premises Plant and Machinery Calls in Arrears Interim Devidend Paid on 31-12-13 Furniture Goodwill Debtors Opening stock Share borkers commission Purchases Carriage Sundry expenses Salary Directors fees Bad debts Debenture interest paid Subscribed and called-up capital 6% Debentures Profit & Loss Statement Surplus Bills Payable Sales Creditors General Reserve Bank Overdraft Bad Debts Reserce (1-4-13) Cash in hand |
7,50,000 6,90,000 8,500 40,000 15,000 25,000 85,000 72,000 6,000 1,90,000 15,000 12,000 18,000 7,000 2,500 12,000 8,00,000 4,00,000 20,000 35,000 6,50,000 22,000 35,000 20,000 4,000 38,000 |
Prepare statement of Profit & Loss A/c, for the year ended 31st
March, 2014 and Balance Sheet in a prescribed form as on that date after
considering the following:
1. Stock on 31st March 2014 was valued at
cost Rs. 1,50,000 (Market Value Rs. 1,60,000)
2. Depreciate Plant and Machinery at 10%, Premises by
5% and Furniture at 10% p.a.
3. Write- off half of share borkers commission.
4. Provide for dad debts at 5% on debtors.
5. Goods distributed as free samples not recorded Rs.
10,000.
6. Goods destroyed by fire Rs. 15,000.
7. Transfer Rs 15,000 to General Reserve
8. Directors propose to pay final dividend at 10%.
9. Make provision for taxation 50,000.
Problem 2. Directors
of Asian Manufactures Ltd., ask you to prepare Statement of Profit & Loss
for the year ending 31st March 2017 and Balance Sheet as on that
date.
|
Particulars |
Dr. Rs. |
Cr. Rs. |
|
Equity
share capital (Rs. 75 per share paid) Share
premium Land
and building Plant
and Machinery Depreciation
Provision: a)
Land and Building b)
Plant and Machinery General
Reserve 6%
Debentures Investment (equity
shares in the limited companies at cost) Stock
(as on 31-3-2017) Balance
at Bank Cash
in Hand Profit
& Loss Statement- Surplus (balance
as on 1-4-2016) Sundry
creditors Income
tax deducted at source Establishment
expenses Rent
and Taxes Debenture
Interest Audit
Fees Directors
Fees Sundry
Expenses Dividend
Received Gross
Profit |
- - 5,00,000 8,00,000 - - - - 1,00,000 70,000 23,000 800 - - 1,200 52,000 2,400 1,500 3,000 6,000 8700 - - |
7,50,000 1,00,000 1,00,000 1,20,000 1,40,000 50,000 - - - - 25,000 60,000 - - - - - - - 11,200 2,12,400 |
|
15,68,600 |
15,68,600 |
i)
Authorised Capital of the Company is Rs. 20 lakhs divided into 20,000 Equity
Shares of Rs. 100 each.
ii)
Market Value of the investments as on the date of Balance Sheet is Rs. 85000.
iii)
Depreciation is to be provided on written down value of land and building 5%
and on Plant and Machinery at 15%.
iv)
Provision of taxation is to be made at 50% of net profit.
v)
Directors propose to transfer Rs. 10,000 to General Reserve.
vi) Workers claim under dispute, pending award of arbitration Rs. 15,000.
Problem
3. Rohit
Company Ltd. was registered with capital of Rs. 2,00,000 divided in 2000 equity
shares. The trial balance of the company as on 31-3-2017 was as follows.
Trial Balance
|
Particulars |
Dr. Rs |
Cr. Rs. |
|
Issued Share Capital Motor Car Sundry Debtors Salaries Bank Interest Rent Received Travelling Expenses Machinery Sales Building Discount Allowed Sundry Creditors Wages Bank Overdraft Stock on 1-4-2016 Profit & Loss Statement Surplus Purchases Carriage Cash in hand at bank Printing and Stationery Repairs and Renewals Directors Remuneration Audit Fees Calls in Arrears Interim Dividends |
- 37,000 9,600 15000 400 - 4,000 80,000 - 50,000 1,500 - 8,000 - 7,000 - 30,000 2,000 1,000 2,000 1,500 2,500 500 3,000 5,000 |
1,00,000 - - - - 3,500 - - 1,05,000 - - 16,800 - 12,200 - 22,500 - - - - - - - - - |
|
2,60,000 |
2,60,000 |
Prepare statement of Profit & Loss and Show the Appropriations
Balance Sheet as on 31-3-2017 after considering the following-
1. Stock on 31-3-2017 is Rs. 6,000.
2. Create a R.D.D at 5% on Debtors.
3. Depreciate Machinery by Rs. 2,000, Building by Rs. 7,000 and Motor
Car by Rs. 620.
4. Outstanding wages Rs. 1,000.
5. Directors declared a final dividend at 20% on paid up capital.
Problem 4. The
Bombay flour mills Ltd., Bombay has an authorised capital 6,000 equity shares
of Rs. 10 each of which 5,000 equity shares have been issued for subscription.
The public have subscribed 3,600 equity shares of Rs. 10 each and have paid the
amount in full on these shares.
Form
the following balances abstracted on 31st March 2018 from the books
of the company, Prepare-
i)
A Balance Sheet as on 31st March 2018 in the vertical form
ii)
Statement of Profit and Loss in the Vertical form
|
Particulars |
Dr.
Rs. |
Cr.
Rs. |
|
Stock of Wheat Stock of Flour Purchases of wheat Manufacturing
expenses Sales of flour Salaries &
wages Printing &
Stationery Postage Travelling expenses Audit fees Sundry expenses Interest on
investments Rent received Profit & Loss
Statement Surplus on 1-4-2017 Directors fees Land Buildings Plant &
Machinery Furniture Motor vehicles Stores and spare
parts Advances Book debts 6% Maharashtra
State Electricity Board
Loan Share Capital General Reserve Dividend
Equalisation Reserve Provision for
Taxation Unclaimed Dividends Deposits Trade creditors Cash in hand Cash at bank |
4,750 8,000 2,02,500 45,000 - 6,500 850 500 750 500 250 100 6,000 25,250 25,250 2,550 12,550 9,150 12,250 15,850 2,000 - - - - - - - 600 20,000 |
2,77,500 60 590 3,000 - - - - - - - - - - 36,000 11,500 5,000 4,250 450 800 62,000 |
|
4,01,150 |
4,01,150 |
You are required to make the
following adjustments:
1. Stocks on 31st
March 2018 were Rs.
i) Wheat 7,450
ii) Flour 10,850
2. Expenses
outstanding are
i) Manufacturing Expenses 11,250
ii) Salaries and Wages 600
iii) Printing and Stationery 500
3. Interest accrued on
investments 60
4. Provision for
taxation appearing in the books of the company is after making all the payment
upto 31st March 2018. Provide Rs. 5,000 for taxation for the year
2017-18.
5. Provide
Depreciation on:
i) Building at 2%
ii) Plant and Machinery at 10%
iii) Furniture at 10%
iv) Motor vehicles at 20%
6. Directors propose
the following appropriation of profit
i) To declare a
dividend of 20% on equity capital
ii) To transfer a sum
of Rs. 2,000 to General Reserve.
iii) To transfer Rs.
1,000 to Dividend Equalisation Reserve.
Problem 5. The
following trial balance extracted from the books of Sahyadri Automobiles Ltd.
Pune as on 31st March 2018.
|
Particulars |
Dr. Rs. |
Cr. Rs. |
|
Share
Capital- Authorised, Issued 8000
shares of Rs. 10 each fully paid Sundry
Debtors and Sundry Creditors Cash
in hand Cash at Bank Sales
Purchases
Plant
& Machinery Office
furniture Provision
for Depreciation: Plant
and Machinery Office
Furniture Carriage
Inward Factory
Wages Repairs
to Machinery Miscellaneous
Exp. (3/5th Factory) Rent
and Rates (3/5th Factory) Staff
Salaries Insurance
P/L
Appropriation (31-3-2017) Bad
Debts R.D.D Stock
on 1-1-2017 Raw
Materials Work
in Progress Finished
Goods Reserve
Fund 6%
Debentures |
- 36,520 2,730 20,000 - 1,46,430 25,600 14,400 - - 1,650 7,240 1,850 1,650 3,650 4,320 120 - 540 - 1,650 2,830 7,820 - - |
80,000 18,560 1,71,320 - - - 2,560 1,440 - - - - - - - 500 - 1,360 - - - 760 2,500 |
|
2,79,000 |
2,79,000 |
After
taking into account the following information prepare statement of profit and
loss for the year ending 31-3—2018 and Balance Sheet as on that date.
1.
Stock as on 31-3-2018 Raw Material Rs. 2,130, Work in Progress Rs. 1,923,
Finished Goods Rs. 21,560.
2.
Insurance was paid for the year ending 30-6-2018
3.
Provide depreciation at 10% on Plant and Machinery and Furniture.
4.
Provide for taxation Rs. 1000. Provide interest on Debentures.
5.
Dividend Proposed at 10%. Transfer Rs. 3,000 to Reserve Fund.
6.
Provision for R.D. D has to be kept at 5% debtors.
v Short
Notes:
1. Schedule
III of companies act 2013
2. Features
of schedule III
3. Statement
of Profit & Loss
4. Vertical Form of Balance Sheet
Module III Profit or Loss Prior to and
After Incorporation
Problem 1. A company ltd
was incorporated on 1st April 2003 to take over as from 1st
January 2003 the existing business of B Brothers. The purchase consideration
was Rs 700000 which was paid on 1at July 2003. The vendors were entitled to
receive interest @5% p.a. on purchase price till the date of payment of
purchase price. The accounts were made up to 31st December 2003 and
the Trading, Profit & loss Accounts gave the following results
|
Particulars |
Amount |
Particulars |
Amount |
|
To Stock To Purchase To G. P c/d To Salary & Wages To Miscellaneous Expenses To Preliminary Expenses To Rates & Taxes To Discount To Repairs to Building To Director’s Fee To Bad debts To Reserve for Doubtful Debts To Advertisements To Interest to Vendors To Depreciation To Net Profit |
4,10,000 7,60,000 210000 |
By Sales By Stock By G. P c/d By Rent |
9,00,000 4,80,000 |
|
13,80,000 |
13,80,000 |
||
|
48000 22000 8000 7000 1800 3000 2400 1000 5000 3600 17500 15000 88700 |
2,10,000 13,000 |
||
|
2,23,000 |
2,23,000 |
It
is ascertained that the sales in the second half of the year were twice the
sales in the first half of the year. Out of bad debts Rs 500 related to the
book debts taken over by the company from vendors.
Apportion the year’s profit between
the pre incorporation period and post incorporation period.
Problem 2.
Madan Limited was incorporated on 1st March 2000 to
acquire a timber merchant existing business as from 1st January 2000 the
Purchase consideration was agreed at rupees 60000 to be satisfied by the issue
of 3000 equity shares of rupees 10 each fully paid and rupees 30000 6%
debentures the following trading and profit and loss account for the year ended
31st December 2000
Trading Profit and Loss Account
for the year ended 31st December 2000
|
Particulars |
Amount |
Particulars |
Amount |
|
To purchase (
after adjusting stock) To gross profit To management
salaries To office
expenses To rent
and rates To selling
expenses To
carriage outwards To
debenture interest To
dividend To
directors fees To
preliminary expenses T0 interest
on purchase consideration To balance |
77400 72600 |
By sales By gross profit |
150000 |
|
150000 |
15000 |
||
|
30000 2400 2100 6800 1100 1350 3000 2000 2870 900 20080 |
72600 |
||
|
72600 |
72600 |
You obtain the following additional information
1. Sales are of
one commodity at a fixed price and the average of the monthly sales for the
first two months was one half of the average of the monthly sales for the
reminder of the Year.
2. The shares and
debentures were issued to the vendors on 1st April 1990.
3. Interest at 6%
per annum was paid on the Purchase consideration from 1st January 1990 to the
date of settlement.
You are required to prepare statement in columnar form apportioning the balance of profit and loss account for the year ended 31st December 2000 between the period before and after Incorporation.
Problem
3. Archana traders Limited was registered on 1st
January 2001 To take over business of M/S Vidya and Manisha as from 1st October
2000 the company received is its certificate for commencement of business on
1st February 2001 the accounts of company prepared for the year ending 30th
September 1991 showed the following
1. Total turnover
for the year amounted to rupees 2,40,000 of which rupees 40,000 related to the
period from 1st October 2000 to 1st February 2001.
2. Trading account
shows gross profit of Rs. 96,000.
Following
expenses were debited to profit and loss account
Particulars Rs
Salary
12000
Rent 4800
General expenses 1800
Printing and stationery
2400
Advertising 4200
Travelling expenses 8400
Bad debts (rupees 500 related to data taken
over from vendors) 1500
Director fee 2000
Audit fee 800
Debenture interest 5000
Depreciation 3600
Preliminary expenses 3,000
Commission on sales 3600
Interest to vendors (up to 31st may
2001) 4000
Find out profit made by the company prior to and after Incorporation.
Problem 4. Ashok Industries Limited was formed on 1st April 2004
to taken over business partnership as from 1st January 2004 The following is
profit and loss account of the company for the year ending 2004
Profit And Loss Account
|
Particulars |
Amount |
Particulars |
Amount |
|
To salary To Printing
& stationery To Bad debts To Depreciation To Preliminary
expenses To Interest to
vendors (Upto 31-5-2004) To Provision for
bad debts To Advertising To Net Profit |
6000 2000 6000 12000 3000 2500 8000 5000 15500 |
By Gross Profit |
60000 |
Out of bad debts
Rs 1500 related to the debtors taken over from partnership. The sales for the
period up to 1-4-2004 were 2/3 of the sales for remaining period. The salary
was evenly paid throughout the year. Compute the profit & loss by the
company prior to and after incorporation.
Problem
5. Ultra-Modern Co Ltd was incorporated on 1st
May, 2003 to take over the business of Modern Co. as a going concern from 1st
January 2003. The Profit & Loss A/c for the year ending 31st
Dec, 2003.
Profit & Loss A/c
|
Particulars |
Amount |
Particulars |
Amount |
|
To Rent & Taxes To Insurance To Electricity Charges To Salaries To Director’s Fees To Auditor’s Fees To Commission To Advertisement To Discount To Office Expenses To Carriage To Bank Charges To Preliminary Expenses To Bad debts To Interest on Loan To Net Profit |
12,000 3,000 2,400 36,000 3,000 1,600 6,000 4,000 3,500 7,500 3,000 1,500 6,500 2,000 3,000 60,000 |
By Gross Profit b/d |
1,55,000 |
|
1,55,000 |
1,55,000 |
The total turnover for the
year ending 31st December, 2003 was Rs.5,00,000 dividend into
Rs.1,50,000 for the period up to 1st May, 2003 & Rs. 3,50,000
for the remaining period.
Ascertain the profits earned
prior to incorporation and after incorporation of the Company.
v Short
Notes:
1. Basis
of Apportionment of Expenses
2. Profit
Prior and After Incorporation
3. Treatment of Profits/ Loss Prior to Incorporation
Module-
IV Human resource accounting, Social Responsibility Accounting, Green
Accounting, Forensic Accounting
v Short
Notes:
1. Human
Resource Accounting
2. Social
Responsibility Accounting
3. Green
Accounting
4. Forensic
Accounting
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