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APRIL 2013 65302/KCS1B

Time : Three hours Maximum : 75 marks

SECTION A — (10 × 1 = 10 marks)

Answer any TEN questions.

All questions carry equal marks.

1. Define cumulative preference share?

2. What is firm under writing?

3. What do you mean by premium on redemption?

4. What is corporate dividend tax?

5. What is the term inter company owing?

6. Define short loans.

7. Define annuity.

8. What is debt securities?

9. What is contingent liabilities?

10. What is inflated profit?

11. Define human resources accounting.

12. What is guaranteed preference shares?

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SECTION B — (5 × 5 = 25 marks)
Answer any FIVE questions each in 200 words.
All questions carry equal marks.
13. Batliboi Co Ltd issued 50,000 equity shares of
Rs. 10 each to the public on condition that full
amount of shares will be paid in a lump sum. All
these shares were taken up and paid by the public.
Pass Journal entries in the books of company
when
(a) Shares are issued at par
(b) Shares are issued at 10% discount
(c) Shares are issued at 10% premium.
14. Kalyan kumar Co Ltd was formed with a capital
of Rs. 10,00,000 in Rs. 10 shares. the whole
amount being issued to the public. The under
writing of these shares was as follows.
A – 35,000 B– 30,000 C– 20,000, D – 10,000,
E – 30,000, F– 2,000.
All the marked applications forms were to go in
relief to the under writers whose stamp any bear.
The applications forms marked by the under
writers were
A – 10,000 B– 22,500 C– 20,000, D – 7,500,
E – 5,000, F– Nil.
Applications for 20,000 shares were received on
forms not marked. Draw up a statement showing
the number of shares each under writer had to
take up.
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15. Nathiya Ltd has a credit balance on P&L A/c of

Rs. 3,00,000 on 1–4–2000 and the net profit for the
year 2000–01 is Rs. 30,00,000. It was decided that
the following decisions be carried out regarding
provisions, reserves and dividend.
(a) General reserve Rs. 3,50,000
(b) Investment allowance reserve Rs. 3,50,000
(c) Provision for taxation @ 50%
(d) Dividend equalization fund a/c Rs. 2,00,000
(e) Dividend on 10% preference shares of
Rs. 20,00,000
(f) Dividend at 15% on 3,00,000 equity shares of
Rs. 10 each fully paid.
You are required to give P&L appropriation
A/c.
16. Raman Ltd agrees to purchase the business of
Krishnan Ltd on the following terms.
(a) For each of the 10,000 shares of Rs. 10 each
in Krishan Ltd. 2 shares in Raman Ltd of
Rs. 10 each will be issued at an agreed value
of Rs. 12 per shar. In addition Rs. 4 per
share cash also will be paid.
(b) 8% debentures worth Rs. 80,000 will be
issued to settle the Rs. 60,000 9% debenture
in Krishnan Ltd.
(c) Rs. 10,000 will paid towards expenses of
winding up.
Calculate the purchase consideration.
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17. A Ltd and B Ltd have agreed upon the values of

assets and liabilities as shown in the following
balance sheet.
Liabilities A Ltd B Ltd Assets A Ltd B Ltd
Rs. Rs. Rs. Rs.
Share Sundry
capital assets 20,00,000 12,00,000
(Rs. 10
each) 20,00,000 10,00,000
Reserves 2,00,000 5,00,000 10,000
shares in
B Ltd 2,00,000
10,000
shares in
A Ltd 3,00,000
22,00,000 15,00,000 22,00,000 15,00,000

Ascertain the amount due to outsiders If A Ltd

and B Ltd decide to amalgamate and form C Ltd.

18. The following is the summarized balance sheet of

Harpreet Ltd at 31.12.1998.
Liabilities Rs. Assets Rs.
Share capital : 3,000 6% Land and
cumulative preference building 2,60,000
shares of Rs. 100 each,
fully paid
3,00,000
1,000 equity shares of Plant and
Rs. 100 each fully paid 1,00,000 Machinery 1,75,000

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Liabilities Rs. Assets Rs.

1,000 equity shares of Stock 37,250
Rs. 100 each
Rs. 50 paid up 50,000
Bank loan (secured on Debtors 15,000
stock and debtors) 25,000
Current liabilities 50,000 Cash in
hand 250
Pre. dividend arrears Profit and
Rs. 36,000 loss a/c 37,500
5,25,000 5,25,000

Under the articles of association of the company,

the preference shares are preferencial as to
dividend (whether declared or not) and capital.

The company went into voluntary liquidation and

sold the fixed assets, stock and debtors for a sum
of Rs. 3,75,000 payable in cash . The expenses of
liquidation were Rs. 250. A call of Rs. 50 per share
is made by the liquidator on 1,000 equity shares
which are partly paid up. the money called is fully
paid up.

You are required to prepare the liquidator's final

statement of account.

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19. Some of the items in the trial balance of modern

bank limited as on December 31, 1982 were as
follows.

Rs. Rs.
Loans and advances 71,50,000 Printing and
stationary 4,500
Current accounts Int. on savings
(including overdraft of bank deposits 75,000
Rs. 15,00,000) 66,00,000
Bills discounted and Auditor's fees 5,000
purchased 19,20,000
Interest on fixed Director’s fees 2,500
deposits 1,55,000
Interest on loans 2,55,000 Interest on
overdraft 95,000
Discount (Subject to Provision for
unexpired discounts bad debts
Rs. 30,000) 2,01,000 Jan 1,1982 42,000
Interest on cash credit 1,05,000 Bad debts 21,000
Commission earned 46,500 Provision for
income tax
Jan 1,1982 66,000
Loss on sale of Income tax
investments 34,000 paid for 1982 54,000
Salaries and
allowances 82,000

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You are required to prepare the Profit and Loss

account of the bank maintaining the provisions for
income tax at Rs. 84,000 and provision for bad
debts at Rs. 52,000 for the year ended December
31,1982.

All Workings should form part of your answer.

SECTION C — (4 × 10 = 40 marks)

Answer any FOUR questions each in 500 words.

All questions carry equal marks.

20. Explain the advantages and limitations of human

resources accounting?

21. Mikas Ltd, Purchased a machine on 1-1-93 for

Rs. 50,000 whose life span is estimated at 5 years
and straight line method of depreciation has to be
provided assuming no scrap value. Replacement
cost of the machine on 31-12-93 was 70,000 and on
31-12-94 was Rs. 1,00,000.

Your are required to compute for 1993 and 1994.

(a) Depreciation under CCA method and

depreciation adjustment.

(b) Additional depreciation.

(c) Back log depreciation and

(d) Transfer to current cost reserve.

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22. L.G. Ltd acquired 90% of the equity shares in D.R.

Ltd on June 30 1985 at a cost of Rs. 6,00,000. No
balance sheet was prepared at the date of
acquisition. the balance sheets of D.R.Ltd as at
December 31, 1984 and 1985 were as follows.
Liabilities 1984 1985 Assets 1984 1985
Rs. (Rs.) (Rs.) Rs. (Rs.) (Rs.)
Share Sundry 6,00,000 7,56,000
capital : assets
20,000 2,00,000 2,00,000 Good 1,00,000 1,00,000
equity will
shares or
Rs. 10 each
Revenue 4,00,000 4,40,000
reserves
Profit and 1,00,000 1,74,000
loss A/c
Proposed – 42,000
dividend
7,00,000 8,56,000 7,00,000 8,56,000
L.G Ltd's balance sheet on 31.12.85 was as under
Liabilities Rs. Assets Rs.
2,00,000 Net assets 30,00,000
equity shares
of Rs. 10 each 20,00,000
Capital Investments 18,000
reserve 2,00,000 equity shares of Rs.
10 each in D.R. Ltd 6,00,000

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Liabilities Rs. Assets Rs.

General
reserve 10,00,000
Profit and
loss A/c 4,00,000
36,00,000 36,00,000
L.G. Ltd has not passed entries for the dividend
proposed by D.R. Ltd.
Prepare consolidated balance sheet of L.G. Ltd and
its subsidiary D.R. Ltd as on 31st December 1985.

23. The books of Jai Prakash insurance co Ltd.

contains the following information in respect of
fine insurance as on 31.12.1981.
Rs. Rs.
Provisions for un 80,000 Refund of 600
expired risks double taxation
(1.1.81)
Estimated liability Management 55,000
in respect of expenses
outstanding claims
on 1.1.81 10,000 Interest and 8,000
dividends (net)
on 31.1281 15,000 Legal expenses 1,500
regarding
claims
Medical expenses 1,000 Profit on sale of 1,750
regarding claims investments
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Rs. Rs.

Claims paid 70,000 Additional

reserve on
31-12-80 60,000

Re insurance
premium 14,500

Re insurance
recoveries 1,500

Premiums 190,000

Commission on
direct business 25,000

Commission on
re-insurance ceded 3,000

Commission on re- 1,000

insurance accepted

Additional reserve is to be increased by 10% of the

net premium income. Prepare revenue A/C

keeping the reserve for unexpired risks at 50% of

premium income.

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24. From the following figures taken from the books of

money bank Ltd. Prepare profit and loss account
and balance sheet as on 31.12.1987.
Rs.
10,000 shares of Rs. 100 each Rs. 50 paid up 500
Reserve fund investments 350
Fixed deposits 950
Savings bank deposits 3,000
Current deposits 8,000
Money at call and short notice 450
Investment 2,500
Interest accrued and paid 200
Rent 20
Salaries (including G.M's Salary Rs. 24,000) 69
Directors fees 6
Provident fund contribution 5
General expenses 10
Profit and Loss Account 01-01-87 200
Bank drafts 310
Unclaimed dividends 20
Premises (after depreciation upto 31.21.1986 1,200
Rs. 1,00,000)
Cash 150
Stock of stationery 10
Cash with RBI 1,400
Traveller’s cheques 500
Balance with other banks 1,600
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Rs.
Letters of credit 300
Borrowed from banks 800
Owing by foreign correspondents 100
Interest and discounts 700
Commissions 50
Bills discounted 600
Loans 3,000
Cash credits and overdrafts 4,000
Bills for collection 140
Acceptances on behalf of customers 200
Dividend for 1986 50
Branch adjustments (Cr) 10

Rebate on bills discounted for unexpired term

is Rs. 5,000. A provision for doubtful debts
amounting to Rs. 30,000/- is required. Create
provision for taxation to the extent of
Rs. 1,00,000/- charge 5% depreciation on
premises on original cost. Traveller’s cheques
paid amounted to Rs. 20,000/-

25. Briefly explain the schedules that comes under

general insurance company Balance sheet.
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