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LOYOLA COLLEGE (AUTONOMOUS), CHENNAI 600 034
B.B.A.DEGREE EXAMINATION -BUSINESS ADMINISTRATION
FOURTH SEMESTER APRIL 2018
BU 4504/ BU 4502 COMPANY ACCOUNTS
Date: 08-05-2018 Dept. No. Max. 100 Marks
Time: 01:00-04:00
Part-A
Answer all questions Marks)
1. Explain pro-rata allotment of shares?
2. What is capital Redemption Reserve?
3. What do you mean by firm underwriting?
4. Define the term" interim Dividend".
5. What are the methods of computing purchase consideration?
6. Anand Ltd. purchased land for Rs.80, 000 from kailash Bros. It issued
Equity shares of Rs.10 each fully paid up in satisfaction of their claim.
Make journal entries to record these transactions?
7. Redemption of 20,000 preference shares of Rs.100 each was carried
Out by utilisation of reserves and by issue of 8,000 Equity shares of Rs.100
at Rs.125.How much should be credited to capital redemption reserve
8. The Bombay motor Ltd. issued 2,00,000 Equity shares of Rs.10 each.
The whole issued was underwritten by Mala. Applications for 60,000
Shares were received in all. Determine the liability of underwriter?
9. Ganesh Ltd., was incorporated on 1st May 1996 to purchase the running business of vinayak and co., with effect from 1st January 1996. The company obtained certificate of commencement of business on24thAugust1996.Calculate the time ratio, if the account were finalised on 31st December 1996.
10. Calculate goodwill, if it is to be calculated at 3 year' purchase of the super
Profit .The firm started business with a capital of Rs.40,00,000.the normal
Rate of earning in this class of business is 15%.the firm earned Rs.74, 000
as profit during the year.
Part-B
Answer any four questions Marks)
11. State the provisions for redeeming preference shares
12. What are the different methods of valuing shares of a company?
13. Explain the steps to be followed in detail when same set of books
Of accounts are continued on acquisition of a running business?
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14. A firm earned net profits during the last three years as follows:
I year Rs. 36,000
II year Rs. 40,000
III year- Rs. 44,000
The capital investment of the firm is Rs.1,00,000.
A fair return on the capital having regard to the risk involved is 10%.
Calculate the value of goodwill on the basis of 3 years' purchase of super profit.
15. Bharat Ltd., issues 1,50,000 equity shares. The whole of the issue was underwritten as follows:
X Y 25% and Z 25%
Applications for the 1,20,000 shares were received in all, out of which applications for 30,000 shares bear the stamp of those for 15,000 shares that of Y and those for 30,000 shares that of Z. The remaining application for 45,000 shares did not bear any stamp.
Determine the liability of the underwriters.
16. From the following balance sheet as on 31-12-93 and 31-12-92, prepare a cash flow statement:
BALANCE SHEETS
Liabilities
1993
1992
Assets
1993
1992
Share capital
Profit loss
General reserve
debentures
Creditors
Outstanding expenses
1,50,000
80,000
40,000
60,000
40,000
15,000
1,00,000
50,000
30,000
50,000
30,000
10,000
Fixed assets
Goodwill
Stock
Debtors
Bills receivable
Bank
1,50,000
40,000
80,000
80,000
20,000
15,000
1,00,000
50,000
30,000
50,000
30,000
10,000
3,85,000 2,70,000 3,85,000 2,70,000

17. A company was incorporated on 30th June 1984 to acquire the business of Mohan as from
1st January 1984. The accounts for the year ended 31st Dec 1984, disclosed the following.
1. There was a gross profit of Rs. 2,40,000.
2. The sales for the year amounted to Rs 12, 00,000 of which Rs. 40,000 were for the first six
months.
3. The expenses debited to profit and loss account included:
Director's fees Rs 15,000
Bad Debts Rs 3,600
Advertising (under a monthly contract of Rs 1000) Rs. 12000
Salaries Rs. 64,000
Preliminary expenses written off Rs. 5000
Donations to political parties given by the company Rs.5000
Prepare a statement showing profit made before and after incorporation.
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Part-c
Answer any two questions Marks)
18. Following a series of losses, XYZ Co.Ltd., resolved to reduce its capital to 50,000 fully paid Rs.5 shares
to eliminate share premium account. The company's Balance Sheet prior to implementation of the
scheme was:
Liabilities
Rs.
Assets
Rs.
Share capital:
50,000 fully paid shares of Rs. 10 each
5,00,000
Goodwill
1,00,000
Securities premium A/c
50,000
Land Buildings
1,62,000
Creditors
62,000
Plant Machinery
2,07,000
Bank Overdraft
73,000
Stock
92,000
Debtors
74,000
Profit Loss A/c
50,000
6,85,000
6,85,000
It was resolved to apply the sum available under the scheme:
To write off the goodwill account.
To write off the debit balance of the Profit Loss account.
To reduce the book values of the assets by the following amounts:
Rs.
Land Buildings 42,000
Plant Machinery 67,000
Stock 33,600
To provide a bad debts reserve of 10% of the book value of debtors.
Show the journal entries to give effect to the scheme and prepare the revised balance sheet
after its implementation.
19. A Ltd company issued 10,000 shares of Rs. 10 each payable as follows: Rs.3 on application RS.3 on
allotment and Rs.4 on first and final call. The company received Rs.13,000 applications. Applications
for 1500shares were rejected and the excess application money received on the other 1500 shares. All
the amounts due on the shares were received except the call money on 500 shares which were forfeited
after due notice. Later 400 of the forfeited shares were reissued at Rs.8 per share. Pass necessary journal
entries.
20. The Summarized Balance Sheet of S ltd as on 31.12.1997 was follows:
Liabilities
Rs.
Asset
Rs.
Share capital
5000 Redeemable Preference shares of Rs.10 each fully paid
6,000 Equity shares of Rs.10 each, fully paid
Profit Loss a/c
Securities Premium
General Reserve
Sundry Creditors
50,000
60,000
5,000
20,000
40,000
25,000
2,00,000
Fixed Assets
Investments
Cash at bank
Other current assets
1,00,000
20,000
18,000
62,000
2,00,000
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The company passed the following resolutions on 1st Jan 1998.
a. To redeem the entire preference share capital at a premium of 10%.
b. To issue 2,000 equity shares of Rs.10 each at a premium of Rs. 2 per share, which has been fully subscribed.
c. To sell the investments at Rs.15, 000.
d. To issue bonus shares as fully paid in the ratio of 2:1 to the existing shareholders including the fresh issue.
You are required to pass journal entries and give the amended balance sheet.
21. The Mafatlal manufacturing company Ltd. Chennai, was registered with a nominal capital Rs 12,00,000
in equity shares of Rs 10 each. The following is the list of balances extracted from its books on 31st
March 1998.
Rs
Rs
Premises
Stock (1.4.97)
Furniture
Calls in arrears
Plant and Machinery
Interim dividend Paid
Sundry debtors
Goodwill
Cash and bank balances
Purchases
Preliminary Expenses
Wages
General Expenses
Advertising
Freight
Salaries
Director's fees
Bad debts
Debenture interest paid
6,00,000
1,50,000
14,400
15,000
6,60,000
75,000
1,74,000
68,000
63,300
3,70,000
10,000
1,69,730
13,670
20,000
26,230
29,000
11,450
4,220
18,000
Sales
debentures
Profit and Loss(CR)
Bills payable
Sundry Creditors
General Reserve
Provisions for Doubtful debts (1.4.97)
Subscribed, called up and paid up capital
8,30,000
6,00,000
29,000
76,000
1,00,000
50,000
7,000
8,00,000
Total
24,92,000
Total
24,92,000
The following adjustments have to be made:
1. Stock on 31st March 1998 was valued at Rs. 1,90,000
2. Write off Preliminary expenses.
3. provide for half year's debenture interest.
4. The provision for doubtful debts on 31st March 1998 should be equal to on sales
5. Director's fees are outstanding to the extent of Rs.550 and salaries Rs.1000
6. Depreciate Plant Machinery by premises by and write off Rs2,400 on furniture.
7. Goods to the value of Rs.3000 were distributed as free samples during the year. But no entry in this respect had been made.
You are required to prepare the statement of Profit and Loss for the year ended 31st march 1998 and balance sheet as on the same date.