N.B.:

(1)

Question No. one is compulsory.

(2)

(3)

All working Notes should from part of answer.

(4)

Figures to the right indicate full marks assigned to question.

(5)

Specify assumptions, if any, while solving the question.

(6)

This paper contains NINE questions.

Q.1.

The Following particulars are available:

You are required to prepare the Profit & Loss account for the year ended 31^st Dec, 2001 & balance Sheet as on that date.

Q.2.

1. Branch Stock A/c.
2. Goods sent to branch a/c
3. Branch stock adjustment a/c
4. Branch Cash A/c
5. Branch Debtors A/c
6. Branch Profit &
7. Loss A/c.

Q.3.

A company gave notice of its intention to redeem its outstanding 50,000- 10% Debentures of Rs. 100 each at a premium of 5% and offered the holders the following options :

a) To accept 12% Cumulative Preference Shares of Rs. 20 each at Rs. 25 per share.

b) To accept 10% Debentures stock at 96%.

c) To have their holdings redeemed for cash.

Accordingly:

(i) 25,000 Debenture holders accepted the proposal (a)

(ii) 20,000 Debenture holders accepted the proposal (b)

(iii) Remaining Debenture holders accepted the proposal (c)

Pass the journal entries in books of company to record only the above transactions.

Q.4.

Following are the Balance Sheets of Big Ltd. And Small Ltd. As at 31^st March, 2001.

Big Ltd. Taken over business of Small Ltd. For Rs. 3,00,000 in the form of Equity shares of Rs. 10 each allotted at par. Included in this payable of Big Ltd. Are bills amounting to Rs. 30,000 accepted in favour of Small Ltd. For goods purchased. Of the above mentioned bills of Rs. 30,000 bills for Rs. 5,000 only still remain on the date of absorption in the hands of Small Ltd. The rest having been endorsed in favour of creditors or got discounted with the bank.

On the date of absorption the stock of Big Ltd. include goods purchased from Small Ltd. At the invoice price of Rs. 15,000. Small Ltd. charging profit at 25% on cost.

Expenses of liquidation of Small Ltd. Rs. 7,000 were met by Big Ltd.

Prepare realisation A/c. and Equity Shares A/c. in the books of Small Ltd. Also pass necessary journal entries in the books of Big Ltd. and prepare its balance sheet after absorption of Small Ltd.

Q.5.

The LUCKY LTD. Was incorporated on 1^st September, 2001 to acquire the business of UNLUCKY & CO. with effect from 1^st January, 2001. The accounts were maintained as usual upto 31^st December, 2001 on which date the following balances were extracted from the books:

Additional Information:

(i)Stock on 31^st December, 2001 Rs. 50000

(ii) Provide depreciation on Furniture @ 15% pa

(iii) Rent upto 30^th June 2001 was Rs. 12000 pa thereafter it was increased by 20%.

(iv) The net turnover in the post incorporation period was Rs. 80000.

(v) Manager’s Salary Rs. 9600 pa is payable (The Manager became a director on formation of the company. His remuneration as director is included in Director’s fees).

(vi) The purchase consideration was agreed at Rs. 120000 satisfied on 31^st October, 2001 by the issue of 8000 Equity Shares of Rs. 10 each fully paid and 400 – 12% Debentures of Rs. 100 each.

(vii) All formation expenses are to be written off.

You are required to prepare the profit & loss A/c for the period ended 31^st December, 2001 showing the profit in pre & post incorporation periods & Balance Sheet of the Company.

Q.6.

A Company’s Position on 31^st December, 2001 was as follows:

(i) 20000 Equity Shares of Rs. 100 each - Rs. 2000000

(ii) 10000 – 6% Debentures of Rs. 100 each - Rs. 1000000

(iii) Interest payable on above debentures - Rs. 120000

(iv) There are no other Liabilities & Reserves.

An independent valuation of the assets on the above date was considered to be worth Rs. 960000 only. Hence the following steps were taken with the approval of all concerned.

(a)  The  face value of the share was to be reduce to Rs. 40 each; Rs. 20 per share paid up.

(b)  The total claim of debenture holders was reduced to Rs. 500000.

(c)  The Debentures Holders agreed to accept shares of Rs. 250000 (Rs. 20 per share paid up) in part satisfaction of their claims as referred to above & for the balance, they were allotted 8% Debentures.

(d)  Assets were brought down to their revised/current value.

(e)  All shareholders (including under (c) above) agreed to pay Rs. 20 per share to make the share fully paid.

You are required to:

(i) Pass the journal entries in books of the company to record the above transactions.

(ii) Prepare the Balance Sheet of the company after the above reconstruction.

Q.7. 

On 31^st December, 2001 a Limited company was incorporated with an authorized capital of Rs. 100000 of Re. 1 each to take over the business of a partnership firm in which MOGRA, ROSE and LOTUS were partners; when their position was as under:

The terms were :

(i) Land & Building are to be transferred to the limited company at a valuation of Rs. 30000 and Plant & Machinery at Rs. 15000. Stock, Debtors & Creditors are to be transferred to the company at book values.

(ii) The Motor Vehicles are to be withdrawn by the partners as Mogra Rs. 4900; Rose Rs. 3500; Lotus Rs. 3600.

(iii) It is estimated that the company will require on opening Bank balance of Rs. 15000.

(iv) Sufficient 9% unsecured debentures are to be issued by the company to the partners in such a way that they will receive the same interest as they received on capitals in partnership for the year 2001.

(v) Equity shares are to be issued at par to partners in their Profit Sharing Ratio for the balance purchase consideration.

(vi) Any surplus or deficiency on partners after the above adjustments; be withdrawn or paid in cash, as the case may be.

You are required to prepare the following accounts to close the books of the firm :

(i) Realisation A/c.

(ii) Partners Capital A/cs.

(iii) Cash/Bank A/c

(iv) New Company A/c

(v) Equity Shares in New Co. A/c

(vi) 9% Debentures in New Company A/c.

Q.8.

On 1^st April, 2001 at fire occurred in Empire Co. limited. As a result, stock in the godown was entirely destroyed, except the salvaged stock of Rs. 4000.

Following information was available from the record of M/s. Empire Limited.

Subsequently it was discovered that :

(a)  Purchases include purchase for Plant and Machinery Rs. 5,000 on 31.12.2000. The plant & Machinery were expected to bring about net saving in costs equal to 5% of sales.

(b)  The valuing of stock on 31^st December, 2000, Rs. 4000 had been written off, some goods which had originally cost Rs. 8000 & which were sold in February 2001 for Rs. 5000.

The company had taken out an Insurance policy of Rs. 18,000 for loss of stock with an average clause. Other information available is i.e. from 1^st January, 2001.

Calculate claim to be lodged with Insurance Company.

Q.9. 

Yield Method of Valuation Of Shares.

Future Maintainable Profit

Capital Redemption Reserve

Capitalisation Method of Goodwill

Prior Periods & extraordinary items & changes in Accounting Policy.