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C 211

*C211*

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Second Year B.Com. Degree Examination, April/May 2012

(SIM Scheme)
FINANCIAL ACCOUNTING II

Max. Marks : 90

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PART A

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Time : 3 Hours

I. Answer any three questions. Each question carries 15 marks.

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1) Maruthi Company Limited Bangalore issued a prospectus to the public offering

follows :

2 lakh shares of rupees 10 each at a premium of Rs. 3 per share payable as

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On application Rs. 3 per share

On allotment Rs. 6 per share (Including Premium)

On first call Rs. 2 per share

On second call Rs. 2 per share.

Application were received for 2,50,000 shares and allotment was made prorata
to 2,20,000. Applications and the balance applications money was refunded.

Money overpaid was adjusted towards allotment.

Mr. A to whom 1000 shares were alloted were failed to pay both the calls and
Mr. B to whom 500 shares were alloted failed to pay the second call. Hence
all there shares were forfeited and re-issued to public at Rs. 9 per share fully
paid up. Pass Journal entries in the books of the Company.

P.T.O.

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2) Ajanth Limited agreed to acquire the business of Ellora Limited as on

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31st March 2011.

Balance Sheet of Ellora Limited as on 31st March 2011
Liabilities

Rs. Assets

Rs.

Land and Building

8,00,000

4,000, 6% of preference shares

Plant and Machinery

4,00,000

2,00,000

8,00,000 Cash and Bank

1,40,000

80,000 Preliminary expenses

60,000

1,20,000

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P and L account

Trade debtors

Reserved fund

8,00,000

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80000 equity shares

of Rs. 10 each

4,00,000 Stock in trade

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of Rs. 100 each

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Paid up capital

8% debentures

4,00,000

Trade creditors

6,00,000

24,00,000

24,00,000

The purchase consideration payable by Ajantha Limited was agreed under :

1) The preference share holder of Ellora Limited were to be alloted 8%

preference share of Rs. 4,40,000.

2) The equity share holders of Ellora Limited were to be alloted 6 equity

shares of Rs. 10 each @10% premium and Rs. 10 cash for every five
share held.
3) The debenture holders of Ellora Limited are to be paid @ 8% premium by
10% debentures.
4) Liquidation expenses Rs. 12,000 to be met by Ajantha Limited.

Give ledger accounts to close the books of Ellora Limited and Journal entries
in the books of Ajantha Limited.

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Rs. Particulars

Call in Arrears

7,500 6% Debentures

Premises

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Machinery

3,00,000 Creditors

7,500 General reserve

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Interim dividend paid

Purchases

38,000

13,100 Sales
5,740 Reserve for bad debts

Stock 1-1-2011

75,000

Goodwill

25,000

87,000

3,500

7,200

Sundry debtors

750

Bank

39,900

Wages

84,800

General expenses

16,900

Salary

14,500

Debenture interest

4,15,000

2,110

60,000

Cash

25,000

5,000 Bills payable

4% government securities
Furniture

50,000
4,60,000

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Bad debts

14,500

1,85,000 Share capital

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Preliminary expenses
Directors fees

3,00,000

Profit and loss account

(Rs. 60,000 added on 1-7-2011) 3,60,000 (1-1-2011)

Freight

Rs.

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Particulars

3) Green Bell Limited has a nominal capital of Rs. 6,00,000 divided into shares
of Rs. 10 each. The following trail balance as on 31st December 2011.

9,000
13,06,000

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13,06,000

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Prepare final accounts after taking into account the following adjustment :

b) Write off 50% preliminary expenses.

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a) Depreciate machinery 10% per annum and furniture 5% per annum.

c) Wages include Rs. 10,000 paid for the construction of a compound wall to

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the premises and no adjustment was made.

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d) Reserve 5% for bad debts.

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e) Transfer Rs. 10,000 to general reserve.

f) Provide for Income tax Rs. 25,000.

g) Closing stock was Rs. 1,01,000.

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4) The following is the Balance Sheet of X Limited and Y Limited as on

31st March 2011.
Liabilities

Y Assets
Fixed assets

Share of

Shares in

Share Capital :

Rs.100 each

80,000 (75% shares)

Profit and

Creditors

6,00,000 3,00,000

8,00,000 4,00,000 Y Limited

General Reserve 2,00,000

Loss Account

Current assets
80,000
1,20,000

2,60,000

3,00,000 2,50,000

40,000 Preliminary
80,000 Expenses

12,00,000 6,00,000

40,000

50,000

12,00,000 6,00,000

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On the date of acquisition of shares by X Limited, Y Limited Balance Sheet

showed a general reserve of Rs. 60,000 and profit and loss account showed

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a balance of Rs. 30,000. Rs. 25,000 included in creditors of Y Limited in the

amount due to X limited. Current assets of X Limited includes an unrealised

profit of 3,000 in the stock worth Rs. 40,000 which was supplied by Y Limited.

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Prepare the consolidated Balance Sheet of X Limited and Y Limited.

5) The following is the Balance Sheet of Mahesh Limited as on 31-3-2011.

Amount

Fixed assets

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Share capital :

Amount
10,20,000

(Including Machinery

10,000 shares of

1,00,000

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Rs. 10 each

Assets

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Liabilities

Rs. 4,50,000)

20,000 shares of

4% government bonds

Rs. 10 each

Current assets

Rs. 8 paid up

1,60,000

2,40,000
12,00,000

Loans and Advances

8,000 shares of
Rs. 10 each

Rs. 5 paid up

40,000

2,000 10% Pref. shares of

Rs. 100 each

2,00,000

General Reserve

1,90,000

Profit and Loss Account

(1-4-2010)
Secured loan

40,000
12,00,000

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3,60,000

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2,00,000

Trade liabilities

3,00,000

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Deposits

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Unclaimed dividend

75,000

Outstanding Expenses

80,000

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Provision for Income Tax 2,35,000

28,20,000

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28,20,000

a) Machinery was revalued at Rs. 6,00,000.

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b) Bonus shares issued for Rs. 1,50,000 as on 30-6-2010.

c) Dividends declared @ 20% before issue of bonus shares.

d) Income Tax in dispute Rs. 4,00,000.

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You are required to calculate the value of each classes of equity shares.
1) Net asset method
2) Yield method.

Assume NRR is 12%.

PART B

II. Answer any three questions. Each question carries 10 marks.

6) From the following details find out the value of goodwill by :
a) Super profit method
b) Capitalization method.
Average Capital employed Rs. 6,00,000
Normal rate of profits 10%
Net profits for 5 years Rs. 98,000, 62,000, 66,000, 70,000 and Rs. 72,000.
Goodwill is 5 years purchase of super profits.

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7) Discuss the various methods of valuation of shares.

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8) Give the opening entries in the books of purchasing company on the

acquisitions of a business.

9) Pass the Necessary Journal Entries in the books of X Limited in the following

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cases :

a) 5,000 10% debentures of Rs.100 each issued at par and redeemable at

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par.

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b) 7,000 6% debentures of Rs.100 each issued at par and redeemable at

5% premium.

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redeemable at par.

c) 3,000 12% debentures of Rs.100 each issued at 4% discount and

d) 5,000 8% debentures of Rs.100 each issued at 4% discount and

redeemable at 5% premium.

e) 4,000 8% debentures of Rs.100 each issued at 5% premium and

redeemable at par.

10) From the following information calculate the value of equity shares :
5,00,000

Expected profit before tax

2,00,000

5000 equity shares of Rs. 100 each

Rate of tax 50%

Transfer to general reserve 20% of
Profit after tax
Normal rate of earnings 15%.

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C 211

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PART C

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III. Answer any three questions. Each question carries 5 marks.

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11) Give the meaning of Amalgamation, absorption and reconstruction.

12) What is goodwill ? Mention the methods of valueing goodwill.

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13) Mention the provisions of Company Act for redumption of preference shares.

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14) List out the provisions relating to issue of shares discount.

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15) State the differences between a share and a debenture.

Pv B

W & G

WW E. W 15 APW.
1)

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I.

P W C gPW . 10 2,00,000 W
3 . AP w. | D PPv vPX.
Ai hW . 3 W

bW . 6 ( )
P . 2

Gv P . 2
2,50,000 WW Ai , 2,20,000 AiWW p B W

W b, E Ai | X. Ai h
| aP |PR .

1,000

bPX , r A 2 P Pv. 500

bPX r B 2 P Pv. D G W
orW QPv . 9 gPW
b.

D PR P P g S .

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C211*

P 31 &3 &2011 G pv Ag pv
P JPw.

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2)

C 211

-9-

G P B g qr P 31&3&2011 D PPv.
. BW

B v :

g Porv

8,00,000

100 . 6% 4,000

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gW

4,00,000

PW

8,00,000

10 . 80000 W 8,00,000

M~W

2,00,000

Por

W P

1,40,000

QR W

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1,20,000

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8% waW

80,000

r T

4,00,000

P R

60,000

4,00,000
6,00,000

24,00,000

24,00,000

P Ag pv PPv Pv J.
G pv QR W 4,40,000 . 8% QR
W a.

1)

2)

G pv 5 WW 10 . 6 W 10%
W a 10 . W .

3)

G pv waW 8% 10% waW

S W v.

4)

g ac 12,000 .W Ag P .

G pv PW ac AP TW W Ag
pv P g SW .

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C 211

X P . 10 . 6,00,000 v . C
R P 31&12&2011 D PPv.
W

. W

PW Q

7,500 6% W

3,60,000 (1-1-2011)

P|

3,00,000

SaW
W wW

1,85,000
5,000
13,100
5,740

Pv

2,110

P R

60,000

P (1&1&2011)

75,000

Pv 4 P PqW

sP|W

87,000

25,000

14,500
50,000

25,000

v
PvP wW
P o
Pv

7,200

C M~W

3,00,000

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w

7,500

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P Pw

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. 60,000 W v )

r T

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B| (P 1&7&2011

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3)

*C211*

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750

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4,60,000
38,000
4,15,000
3,500

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C211*

C 211

84,800

Sa

16,900

14,500

W wx

9,000

13,06,000

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13,06,000

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39,900

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D PX AW W~, 31&12&2011PR AWv P B g q

r
.

A) Pv 10 P |
WW P W Pv 5 sP |
WW P
w.

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B) Ar SaW w.
C) B| Pv |PR . 10,000 .W P vX.
C WY AP w.
D) Pv PR Pv 5r w.

E) W . 10,000 .W W.
F) B WW . 25,000 w.

M) P . 1,01,000W.

4) X Y B g qrW 31&3&2011 D PPv.

gW

v :

BW
AW

6,00,000 3,00,000

.100 W 8,00,000 4,00,000 Y

r T

2,00,000
80,000

80,000

40,000 (75% W)

2,60,000

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C 211

*C211*

-12-

80,000

a BW

SaW

12,00,000 6,00,000

3,00,000 2,50,000

1,20,000

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40,000

50,000

12,00,000 6,00,000

Y W Pv P Y B
g qrW 60,000 . W r T 30,000 .W
R . Y W X PR PvP 25,000 .W
Pw . Y
h P X a BW
. 40,000

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Av P 31&3&2011 D PX.

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5)

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E A . 3,000 WP BW Pw. X Y
i B g qr .
gW

. BW

v :

. 10 10,000 W

1,00,000

. 8 10

20,000 W

. 10 . 5

1,60,000

8,000 W

10,20,000

W
(. 4,50,000 Pv )
Pv 4 P vW
a BW

40,000

2,40,000
12,00,000

vW

. 100 Pv 10 2,000
QR W

2,00,000

1,90,000

r T
(1-4-2010)

40,000

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3,60,000

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C211*

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2,00,000
3,00,000
2,35,000
75,000

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s~W
gW
B WWX
(P )
v
Q SaW

12,00,000

80,000
28,20,000

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28,20,000

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6,00,000 . WW W @ P.
30&6&2010 1,50,000 W v.

W v . 20 N.
P B W PP . 4,00,000.

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A)
B)
C)
D)

C 211

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1)

2)

WP .

C W Pv w.
. 12 G F.

WW E. W 10 APW.
6) D PX W .
A) AP .
B) vP P Pv w.
v wP . 6,00,000.
. 10.
5 W . 98,000, . 62,000, . 66,000, . 70,000
. 72,000.

II.

W &

AP 5 S r ?

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C 211

*C211*

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W P WW .

8)

S P P J PvW P g
SW w.

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7)

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9) X P D PPv W AP g SW .

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A) . 100 Pv 10 5,000 W S W vWv w, S

W v.

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B) . 100 Pv 6 7,000 W SW vWv w Pv 5

ac .

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C) . 100 Pv 12 3,000 W Pv 4 w vWv w,

SW .
D) Pv 100 Pv 8 5,000 W Pv 4 w vWv w
Pv 5 ac .

E) . 100 Pv 8 4,000 W Pv 5 ac vWv w

SW .
D PX Pvw :

10)

. 100 5,000 W

. 5,00,000

W Ai

. 2,00,000

W . 50
W . 20r W WO
B . 15.

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C211*

C 211

W &

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WW E. W 5 APW.

HP W, W a A Pw.

12)

G ? P W .

13)

P P P B W W .

14)

W w vWv v X C W qr w.

15)

W W waW v C W .

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11)

III.

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_______________

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