Corporate Accounting Paper- II Sem- IV Question Bank
VIVEKANAND
COLLEGE KOLHAPUR (AUTONOMOUS)
B.Com-
II Sem- II
CORPORATE
ACCOUNTING PAPER- II
QUESTION
BANK
Module- I Amalgamation and Absorption of Companies
Ø
PROBLEMS
Problem
1. A Ltd. acquires B Ltd. for a consideration of Rs. 2,
70,000 to be satisfied in the form of fully paid equity shares of Rs.150 each.
The balance sheets of the two companies on 31st March 2008 i.e. the
date of acquisition were as follows:
|
Liabilities |
A Ltd.
Rs. |
B Ltd.
Rs. |
Assets |
A Ltd.
Rs. |
B Ltd.
Rs. |
|
Share capital: 4000 Equity shares of Rs 150 each 900 Equity shares of Rs. 270 each General Reserve Development Rebate Reserve Export Profit Reserve P&L A/c Sundry Creditors |
6,00,000 - 1,42,000 40,000 75,000 7,000 13,000 |
- 2,43,000 40,000 20,000 20,700 3,000 11,000 |
Land& Building Plant& Machinery Stock in trade Sundry Debtors Cash |
4,00,000 3,10,000 90,000 73,000 4,000 |
1,00,000 1,00,000 80,000 57,000 700 |
|
|
8,77,000 |
3,37,000 |
|
8,77,000 |
3,37,000 |
A) Pass Journal Entries in the books of B Ltd
(8 Marks)
B) Prepare the Balance sheet of A Ltd (8 Marks)
Problem 2. Prakash Co.Ltd & Kiran Co.Ltd carry on business
of similar nature. They agreed to amalgamate and form new company, Ravi Ltd, to
take over the business of these companies as on 31st march 2008 when
their balance sheet were as under.
Balance
sheet of Prakash Co.Ltd
|
Liabilities |
Rs. |
Assets |
Rs. |
|
Share capital: 4,000 Equity shares of Rs.10 each 6% Preference shares of Rs 100 each P&L A/c Sundry Creditors |
40,000 20,000 18,000 14,000 |
Building Plant & Machinery Stock Debtors Cash at Bank Preliminary Expenses |
20,000 15,000 11,000 40,000 4,400 1,600 |
|
|
92,000 |
|
92,000 |
Balance sheet of Kiran Co.Ltd
|
Liabilities |
Rs. |
Assets |
Rs. |
|
Share capital: 5,000 Equity shares of
Rs.10 each 250 9% Preference shares
of Rs 100 each P&L A/c Sundry Creditors |
50,000 25,000 30,000 25,000 |
Goodwill Plant & Machinery Stock Debtors Cash at Bank Pre-paid expenses Preliminary Expenses |
10,000 50,000 25,000 40,000 2,500 1,500 1,000 |
|
|
1,30,000 |
|
1,30,000 |
1. In respect of Kiran Company Limited it was agreed as under-
i) Ravi
Limited agreed to pay rupees 75000 to
Prakash Limited by issue of 7000 equity shares of rupees 10 each at par
as fully paid and by paying cash for fractional shares amounting to 500 shares.
ii) Preference
shareholders of Prakash Company Limited agreed to receive 195 equity shares in
full satisfaction of their claim.
iii) All
Assets and liabilities were taken over at book values except debtors which were
subject to provision at 5% bad debts.
iv) Liquidation
expenses amounted to rupees 1000.
2. In respect of Kiran Company Limited it was agreed
as under-
i) for the
purpose of take over the Assets of Kiran Company Limited were revalued as
follows stock rupees 27500 Debtors subject to 10% provision and Goodwill at
book value machinery at rupees 55000.
ii) Out of
cash Rupees 1500 to be taken over and rupees 1000 to be kept with Kiran Limited
for meeting liquidation expenses.
iii)
Preference shareholders were to be redeemed at 10% premium they were to be
given 10% preference shares of rupees 100 each in Ravi Company Limited.
iv) Balance of purchase
consideration was to be satisfied by issue of equity shares of rupees 10 each
at par of Ravi Company Limited.
A) Pass Journal entries in the
books of Prakash Co.Ltd. (8
Marks)
B) Prepare Necessary Ledger A/c in the books of Kiran Co. Ltd. (8 Marks)
Problem 3. The
two companies Shyam Co. and Sunder Co decided to amalgamate from 1-4-2000.Their
Balance Sheet were as under:
Shyam &
Co. Ltd.
|
Liabilities |
Amount |
Assets |
Amount |
|
Share capital: 2000 Shares of Rs100 each
and 80 paid Reserve fund P&L A/c Debentures Creditors |
1,60,000 2,000 24,000 29,000 15,000 |
Goodwill Land & Building Plant & Machinery Motor Car Stock Debtors Cash in hand |
20,700 80,000 55,000 20,000 27,000 8,400 18,100 |
|
|
2,30,000 |
|
2,30,000 |
Sunder & Co.
Ltd
|
Liabilities |
Rs. |
Assets |
Rs. |
|
Share capital 3000 shares of Rs. 100
each Rs. 40 paid Debentures Creditors |
1,20,000 40,000 46,000 |
Land and Building Plant and Machinery Stock Debtors Cash in hand & at Bank Profit and loss A/c |
67000 50,000 46000 13700 19300 10000 |
|
2,06,000 |
2,06,000 |
The authorized capital of the combined company i.e.
Shyam Sundar & Company Limited was Rs. 4, 00,000 divided into 4000 shares
of rupees 100 each. Assets and liabilities of both the companies are taken or
on the following conditions:
In the case of Shyam & Company Limited the
Goodwill was to be valued at twice the average profit of last three years. The profits
for the last three years were Rs. 20,800 Rs.22, 000 Rs. 25,000. Plant and
Machinery and Motor Cars were to be depreciated by Rs.15000 and Rs. 2000
respectively. Stock was to be valued at Rs. 34,050 Creditors are to be taken
over subject to a discount of 5%.
In the case of Sundar & Company Limited
Land and Buildings were to be taken at Rs. 80,000 and plant and machinery at
Rs. 45,000. No payment was made to be made for goodwill.
The consideration paid in the case of Shyam
& Company Limited was in fully paid shares of the Shyam Sundar &
company for the amount due. Sundar & Company Limited was to be allotted
1000 fully paid shares as part of the Purchase consideration, the balance being
paid in cash.
A) Draft journal entries to close the books of Shyam and Co. (8 Marks)
B) Necessary ledger accounts in the books
of Sunder & Co.
(8 Marks)
Problem
4.
X Ltd. and Y Ltd. agreed to amalgamate and formed a new company called XY Ltd. with
an authorised capital of Rs. 5, 00,000 the balance sheets of the two companies
were as under:
Balance sheet
|
Liabilities |
X Ltd. Rs |
Y Ltd. Rs. |
Assets |
X Ltd. Rs |
Y Ltd. Rs. |
|
Equity
share capital Rs. 10 each Reserve
fund P&
L A/c 5%
Debentures Creditors
Provident
fund |
1,00,000 8,000 22,000 50,000 24,500 5500 |
70,000 5,500 15,000 - 30,000 4,000 |
Sundry
assets Property
Debtors
Stock Bank
|
1,20,000 30,000 40,000 10,000 10,000 |
62,000 - 45,000 7,500 10,000 |
|
2,10,000 |
1,24,500 |
2,10,000 |
1,24,500 |
The
purchase price consisted of-
i)
The assumption of the liabilities of both the companies.
ii)
The discharge of 5% debentures in X Ltd. at a premium of 10% by the issue of 8%
debentures in new company.
iii)
The issue at a premium of Rs. 5 per share of equity shares of Rs. 10 each in
new company.
For
the purpose of amalgamation, the assets are to be revalued as under:
|
Assets
|
X Ltd. Rs |
Y Ltd. Rs. |
|
Sundry
Assets |
1,40,000 |
65,000 |
|
Property |
50,000 |
- |
|
Debtors
|
35,000 |
40,000 |
|
Stock
|
8,000 |
8,000 |
|
Goodwill |
10,000 |
7,000 |
You are required to:
A) Prepare
Realisation A/c, equity share holders A/c and C Company Ltd A/c in the Books of
X Ltd.
(8 Marks)
B) Prepare
Realisation A/c, equity share holders A/c and C Company Ltd A/c in the Books of
Y Ltd.
(8 Marks)
Problem
5.
The
engineering company Limited sells its business to the scientific company
limited on 31st March 2015 on which date its balance sheet was as
follows-
Balance sheet
|
Liabilities |
Rs. |
Assets |
Rs. |
|
Paid-up
capital 2,000 shares of Rs. 100 each 6%
100 debentures of Rs. 1000 each Sundry
creditors Reserve
fund Profit
and loss accounts |
2,00,000 1,00,000 30,000 50,000 20,000 |
Goodwill
Freehold
property Machinery
Stock
Bills
receivable Sundry
debtors Cash
at bank |
50,000 1,50,000 83,000 35,000 4,500 27,500 50,000 |
|
4,00,000 |
4,00,000 |
The
scientific company ltd. agreed to take over the assets (exclusive of cash and
goodwill) at 10% less than the book values, to pay Rs. 75000 for goodwill and
to take over the debentures.
The purchase consideration was to be
discharged by the allotment to the engineering company ltd. of 1500 shares of
Rs. 100 each at a premium of Rs. 10 per share and the balance in cash. The cost
of liquidation amounted to Rs. 3000 borne by the engineering company Ltd.
A) Prepare necessary accounts in the
books of Engineering Company Ltd. (8 Marks)
Problem 6.
The assets of Rukmini Company Limited are purchased by the shrikrishna Company Limited. The purchase consideration was agreed upon as under:
a) A cash payment of Rs. 90 per share
for shares held by the members in the vendor company.
b) Settlement of debentures in the
Rukmini Company Limited by repayment at Rs 550 per debenture held.
c) To exchange four shares of
Shrikrishana Company Limited of Rs.75 each, quoted in the market at Rs. 140
each for one share held by the members in the vendor company.
d) Payment of realisation expenses Rs.
12000.
The balance sheet of Rukmini Company Limited as on 31st March 2000 was as follows:
|
Liabilities |
Rs. |
Assets |
Rs. |
|
Share capital 6000 Equity Shares of Rs. 500 each
fully paid Insurance Fund General Reserve Profit & Loss Account 1,300, 7% Debentures of Rs 500 each Sundry creditors Bills Payable Bank Overdraft |
30,00,000 65,000 2,75,000 60,000 6,50,000 1,10,000 1,40,000 2,00,000 |
Land and Building Plant and Machinery Furniture & Fixtures Vehicles Stock in hand Bills Receivable Sundry Debtors 3,00,000 Less- Provision for doubtful debts 35000 Cash in hand |
10,00,000 16,00,000 3,10,000 2,40,000 8,10,000 1,90,000 2,65,000 85,000 |
|
45,00,000 |
45,00,000 |
You
are required to Prepare Realisation Account in the books of Rukmini Company
Limited and pass Journal entries in the books of Shrikrishna Company
Limited. (8 Marks)
Problem
7.
The following is the Balance Sheet of
Weak Ltd As on 31st March 1991.
|
Liabilities |
Rs. |
Assets |
Rs. |
|
Share capital 2,000 shares of Rs. 100 each Reserve Fund 5% Debentures Loan from A (as director) Sundry Creditors |
2,00,000 20,000 1,00,000 40,000 80,000 |
Goodwill Land & Building Plant & Machinery Stock Cash at Bank Discount on Debentures Debtors |
35,000 85,000 1,60,000 55,000 34,000 6,000 65000 |
|
4,40,000 |
4,40,000 |
The business of the Weak Company taken
over by Strong Ltd, As on that date on the following terms:
a)
The Strong Ltd to take over all the assets except cash, the assets to be valued
at their book values less 10% except goodwill which was to be valued at 4 years
purchase of the excess of average ( five years) profit over 8% of the combined
amount of share capital and reserve.
b)
The Strong Ltd, to take over trade creditors which were subject to discount of
5%.
c)
The purchase consideration was to be discharged in cash to the extent of Rs.
1,50,000 and the balance in fully paid equity shares of Rs. 10 each valued at
Rs. 12.50 per share.
d)
The average of the five years profit was Rs. 30,100.
e)
The expenses of liquidation amounted to Rs. 4000.
Calculate
purchase consideration and prepare Realisation Account in the books of Weak Ltd
and pass journal entries in the books of Strong Ltd. (8
Marks)
v Short
Notes:
1. Amalgamation
2. Absorption
3. Purchase
consideration
4. Methods of calculation of Purchase consideration
Module- II Valuation of Shares
Problem 1. From the Balance Sheet of Kalapi
Ltd. and the additional information given below, ascertain intrinsic value of
each share. (8 Marks)
Balance Sheet as on 31-12-2019
|
Liabilities |
Rs. |
Assets |
Rs. |
|
Equity shares of Rs.10 each 12% preference shares of Rs. 10 each General Reserve Profit and Loss A/c Unsecured Loans Current Liabilities |
3,00,000 1,00,000 80,000 70,000 1,00,000 30,000 |
Goodwill Leasehold property Fixtures Investments Current Assets Loans and Advances Miscellaneous Expenses |
1,20,000 3,50,000 60,000 50,000 75,000 15,000 10,000 |
|
6,80,000 |
6,80,000 |
Additional
information:
(i) Leasehold Property and Fixtures are
valued at Rs. 4,00,000 and Rs. 50,000 respectively.
(ii) Goodwill should be valued at three
years purchase of average profits of last five years. The profits for the last
five years are –Rs. 70,000 ; Rs. 90,000 ; Rs. 75,000 ; Rs. 85,000 and Rs. 80,000.
Problem 2. Following
information pertains to Zed Ltd.
|
|
Rs. |
|
8% 1,000 Preference Shares of Rs. 10
each |
1,00,000 |
|
25,000 Equity Shares of Rs. 100 each |
25,00,000 |
|
Average Annual Profits |
5,00,000 |
|
Income Tax |
50% |
|
Transfer to Reserve |
25% |
|
Normal Return |
10% |
Mr. Black, the holder of 100 Equity Shares in the above company assigns you the work of valuing his shareholding. Apply the yield method to make the valuation and ascertain the value of his holdings. (8 Marks)
Problem
3. The following is the balance sheet of X Limited as
on 31st March 2022.
Balance Sheet
|
Liabilities |
Rs. |
Assets |
Rs. |
|
Share capital 10,000 share of Rs. 100 each Reserve
fund Depreciation Fund: 1. Plant and Machinery 2. Workmen's Accident Compensation Fund (Estimated
liability Rs.5000) Employees profit sharing fund Staff provident fund Sundry creditors 5% debentures Proposed dividend |
10,00,000 6,00,000 50,000 25,000 50,000 75,000 70,000 2,00,000 1,50,000 |
Land and Building Plant and
Machinery Goodwill Patents
Rights Stock Debtors
2,00,000 Less-
Provisions 20,000 Investment Cash |
8,00,000 7,00,000 2,00,000 1,75,000 1,00,000 180,000 50,000 15,000 |
|
22,20,000 |
22,20,000 |
Find out the intrinsic value of each share taking into consideration the
following-
1. Depreciation fund is in excess by Rs.10,000 than
the amount of actual depreciation.
2. Debts are all considered good.
3. Interest on debentures for half year is to be
provided.
4. The market values of the assets are as under-
Stock in trade valued at cost is less by Rs. 10,000
compared to its market value.
Value of patent right exceeds by Rs. 25000.
Depreciation on the building
Rs. 50,000 is remained to be charged. (8 Marks)
Problem
4. Following
is the Balance Sheet of Janata Ltd., as on 31st March 2021.
Balance Sheet
|
Liabilities |
Rs. |
Assets |
Rs. |
|
Issued
capital 40,000 shares of Rs. 10 each General
Reserve Profit
& Loss A/c 5%
Debentures Current
Liabilities |
4,00,000 90,000 20,000 1,00,000 1,30,000 |
Block
Capital Current
Assets Goodwill |
5,00,000 2,00,000 40,000 |
|
7,40,000 |
7,40,000 |
On
31st March 2021 the block capital was independently valued at Rs.
5,50,000 and Goodwill at Rs. 50,000. The net profits for the last three years
were Rs. 51600, Rs. 51650 and Rs.52000 of which 20% was placed to reserve, this
proportion being considered reasonable in the industry in which the company is
engaged and where a fair investment return may be taken at 10%. Compute the
value of company’s share by- a) Net Asset Method b) Yield Method c) Fair Value Method
Problem
5. The
following is the summarised Balance sheet as on 31st march 2013 of C
Ltd.
Balance Sheet
|
Liabilities |
Rs. |
Assets
|
Rs. |
|
Issued and
Subscribed capital: 100000 shares of
Rs. 10 each General Reserve Profit & Loss
A/c Bank Overdraft Creditors Provisions for
taxation Depreciation fund:
Plant Workmen’s saving
A/c |
10,00,000 2,50,000 1,65,000 1,50,000 2,25,000 1,00,000 50,000 1,00,000 |
Debtors Stock (Market Value
7,50,000) Plant Premises |
2,25,000 7,25,000 5,30,000 5,60,000 |
Following are the
revalued amounts of assets:
|
|
Rs. |
|
Goodwill |
7,75,000 |
|
Plant |
5,50,000 |
|
Premises |
6,00,000 |
Net profits of the
company after providing for taxations but before deduction of amount of
dividends were:
|
|
Rs. |
|
For
the year ended 31-3-2011 |
3,50,000 |
|
31-3-2012 |
4,25,000 |
|
31-3-2013 |
5,00,000 |
Normal
profit in this type of business is 10%. Calculate fair value of each share of
the company.
v Short
Notes:
1. Net
Assets/ intrinsic value method of valuation of shares
2. Yield/
Market value method of valuation of shares
3. Fair
value method
4. How
to determine Intrinsic value of shares
Module III Liquidation
Problem 1. The Bad luck Ltd. went into
voluntary liquidation on 1st April 1998. On which date its position
was under: 8
Marks
|
Liabilities |
Rs. |
Assets |
Rs. |
|
Share
Capital 5,000
Share of Rs.80 Per Share Fully
Paid Loan
(secured by mortgage of land, balding & Machinery) Unsecured Loans & Liabilities (including preferential) |
4,00,000 1,00,000 2,00,000 |
land,
balding & Machinery Other
Fixed Assets Stock Debtors Loans Cash Profit
& Loss A/C |
80,000 2,60,000 1,05,000 1,00,000 40,000 5,000 1,10,000 |
|
7,00,000 |
7,00,000 |
Land, balding
& Machinery were realised by Secured creditor for Rs. 1, 20,000. Other
Fixed Assets fetched Rs. 40,000, Debtors Rs. 20,000 and Stock Rs. 10,000. Loans
were wholly bad. The liquidators are entitled to a fixed remuneration of Rs.
1,000 Plus 2% of the amount paid to unsecured creditors. The Liquidator’s out
of pocket expenses amounted to Rs. 1,000.
Show
Liquidator’s final statement of account.
Problem 2.
X.
Ltd went into voluntary liquidation on 31.03.2008. 8 Marks
The following was the position of the company in the
above date
|
Liabilities |
Rs. |
Assets |
Rs. |
|
Share
Capital 14,550
Share of Rs.10 each Preferential Creditors Partly secured
Creditors Unsecured Creditors Bank Overdraft |
1,45,500 4,000 29,180 79,160 1,160 |
Goodwill Leasehold
Property Sundry
Debtors Cash
at Bank Profit
& Loss A/C |
30,000 25,000 1,42,120 500 61,380 |
|
2,59,000 |
2,59,000 |
The
liquidator realised the assets as Follows:
1.
Leasehold Property which was used to pay first partly secured Creditors prorata
18,000
2.
Sundry Assets
99,500
3.
Cash at Bank
500
Total 118000 The
expenses of liquidation Amount to Rs. 1,170
The
Liquidator’s remuneration was agreed at 2.5 % on the amount realised and 2% on
the amount paid to unsecured Creditors.
Prepare liquidator’s final statement of
account.
Problem 3. M/s Ajeet Company Ltd. Went into
voluntary liquidation on 31-03-2008 When the following Balance Sheet was
Prepared.
|
Liabilities |
Rs. |
Assets |
Rs. |
|
Subscribed capital 19,500 shares of Rs.
10 each Sundry Creditors : Preferential Partly Secured (on
Building) Unsecured Bank Overdraft
(Unsecured) |
1,95,000 24,200 55,310 99,790 12,000 |
Goodwill Patents Building Plant & Machinery Stock in trade Sundry Debtors Bills Receivable Profit & Loss A/c |
40,000 10,000 48,000 65,500 56,800 64,820 2,500 98,680 |
|
|
3,86,300 |
|
3,86,300 |
The liquidator realised
the assets as follows:
1. Building (used to pay
partly secured creditors) 35,000
2. Plant
51,000
3. Stock in trade 39,000
4. Bills Receivable
2500
5. Debtors
58500
The expenses of liquidation amounted
to Rs. 1,000 and liquidator’s remuneration was agreed at 2.5% on the amount
realised and 2 % on the amount paid to the unsecured creditors including (preferential creditors)
Prepare Liquidation Final Statement of account.
Problem 4. Kolhapur Ltd. went into voluntary
liquidation on 31st July 2003 on which date its position was as
follows:
Balance sheet as at 31st July 2003
|
Liabilities |
Rs. |
Assets |
Rs. |
|
Equity share capital 2000 Share of Rs.100
each Loans Secured by a Charges on Machinery 30,000. Secured by a floating Charges 20,000. Creditors(including Rs. 1000
Preferential ) |
2,00,000 50,000 1,51,000 |
Cash at bank Machinery Furniture Stock Debtors Loans Profit & Loss A/C |
1,700 40,000 10,000 1,00,000 1,80,000 5,000 64,3000 |
|
4,01,000 |
4,01,000 |
Prepare liquidators final statement of A/c.
Problem 5. Akash Ltd. went into voluntary
liquidation on 31st December 1996. Its Balance sheet as on that date
was as under.
Balance sheet
|
Liabilities |
Rs. |
Assets |
Rs. |
|
2400 Equity Share of Rs.100@ each Fully Paid 1,000
6% Preference Share of
Rs.100@ each Fully Paid Loan (secured by charges on
building ) 9% Debentures (having floating charges) Creditors (including Rs. 5,000
Preferential) |
2,40,000 1,00,000 25,000 1,00,000 55,000 |
Building Machinery Plants Stock Debtors Cash in hand Profit & Loss A/C |
60,000 1,60,000 40,000 1,00,000 38,000 2,000 1,20,000 |
|
5,20,000 |
5,20,000 |
The Assets were realised by the liquidator as Machinery Rs. 1,50,000, Stock Rs. 90,000 Debtors Rs.30,000, Patents Nil. Building was realised for Rs. 35,000 by the creditors. The expenses of liquidation amount to Rs. 6,500. Preference dividend remained unpaid for one year. The Debentures were repaid on 30-06-1997 together with interest up to date.
Liquidator’s remuneration was fixed
2
% on realised of
assets including surplus form the secured creditors and 2% as amount paid to
unsecured creditors (excluding Preferential creditors). Prepare Liquidators
final statement of account.
Problem
6. Unlucky Ltd. went into voluntary
liquidation on 31-03-2008 its Balance Sheet was as Follows:
|
Liabilities |
Rs. |
Assets |
Rs. |
|
Issued Share Capital 2250 Equity Share of Rs.100 each fully Paid 10% Debentures Interest outstanding on debentures Creditors |
2,25,000 1,00,000 5,000 1,73,000 |
Freehold Property Plant & Machinery Motors Vehicles Stock Debtors Profit & Loss A/C |
1,80,000 89,000 57,500 86,000 75,000 15,500 |
|
5,03,000 |
5,03,000 |
The liquidator realised
the assets as Follows: Rs.
Freehold Property
1, 20,000
Plant & Machinery 29,000
Motors Vehicles 17,000
Stock 21,000
Debtors 45,000
1. Creditors include preferential creditors Rs. 3,200 and a
loan for Rs. 50,000 secured by a mortgage on freehold property.
2. The cost liquidation was Rs. 1020.
3. Liquidator is entitled to a remuneration of 1.5% on
assets realised by him and 5% on amount distributed among unsecured creditors. (Excluding Preferential Creditors)
4.
The debentures and creditors were discharged on 30th September 2008
Prepare Liquidators Final
Statement of account.
v Short
Notes:
1.
Liquidation and its Process
2.
Modes of Winding-up/ Liquidation
3.
Appointment of Liquidator
4.
Priority or Order of Payment in
Liquidation
5.
Liquidators Remuneration
Module-
IV Computer Application Through Accounting Package Tally
v Short
Notes:
1. Important Features of Tally
2. Creation of Company
3. Types of Vouchers
4. Generating Accounting Report
Comments
Post a Comment