DISTANCE EDUCATION
B.B.A. (CS)/B.B.A. (Lateral) DEGREE EXAMINATION,
MAY 2017.
ADVANCED ACCOUNTANCY
(2005 Onwards)
Time Three hours Maximum 100 marks
SECTION A — 8 40 marks)
Answer any FIVE questions.
1. Define Partnership. State its important features.
2. Senthil Co. Ltd. issued 4,000 shares of Rs. 10 each at a
premium of Rs. 2 per share. The amount was payable as
under:
Rs.
On application 3 per share
On allotment 4 per share (including premium)
On first call 3 per share
On second call 2 per share
The company received applications for 5,000 shares and
the allotment was made as under:
Applicants for 200 shares Nil
Applicants for 800 shares Full
Applicants for 4,000 shares 3,200 shares.
All moneys were duly received except the first call on 200
shares and final call on 300 shares. Pass journal entries
and prepare balance sheet of the company.
Sub. Code
24
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3. Q and R share profits in proportion of ½ ¼ and ¼. On
the date of dissolution their balance sheet was as follows:
Liabilities Rs. Assets Rs.
Creditors 14,000 Sundry Assets 40,000
capital 10,000
capital 10,000
capital 6,000
40,000 40,000
The assets realized Rs. 35,500. Creditors were paid in
full. Realisation expenses amounted to Rs.l,500. Close the
books of the firm.
4. Good Luck Ltd. issued 1,000 debentures of Rs. 100
each. Give appropriate journal entries in the books of the
company, if the debenture were issued as follows:
Issued at par, redeemable at par.
Issued at a discount of repayable at par.
Issued at a premium of repayable at par.
Issued at par, redeemable at a premium of 10%.
Issue at a discount of repayable at a premium of
10%.
You are also required to show how the items concerned
appear in the Balance Sheet in each of the above cases.
5. Arun Ltd and Kumar Ltd. decided to amalgamate and a
new company Arun kumar ltd. is formed to take over both
the companies as on 31st March 1998.
Balance Sheet
Liabilities Arun Kumar Assets Arun Kumar
Ltd Ltd Ltd Ltd
Share
Capital
Rs.10 each
5,00,000 2,50,000 Land and
Building
1,00,000 2,00,000
Bank loan 50,000 1,50,000 Plant and
machinery
5,00,000 6,00,000
Creditors 1,50,000 2,00,000 Good will 1,00,000
Bills payable 1,00,000 1,50,000 Patents 1,00,000
General
reserve
50,000 50,000 Stock 1,00,000 1,20,000
P L A/c 1,50,000 4,00,000 Debtors 2,00,000 1,00,000
Capital
reserve
1,00,000 1,00,000 Bills receivable 80,000
Cash 25,000 15,000
Bank 75,000 85,000
11,00,00013,00,000 11,00,000 13,00,000
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The following is the accepted scheme of valuation of
business of the two companies.
Arun Ltd.
Create Provision for bad debts 10% on Debtors.
Write off goodwill by Rs. 50,000
Write off 20% on Plant Machinery and 10% on
Land and Building.
Write off 20% of Stock.
Kumar Ltd.
Write off 10% on Land Buildings and 20 on
Plant Machinery.
Create provision for bad debts 10% on debtors.
Write off patents by Rs. 25,000.
You are required to compute Purchase Consideration for
both the companies.
6. State the difference between Amalgamation and
Absorption.
7. A fire occurred at the premises of a trader on 31.5.94
destroying a great part of his goods. His stock at 1.1.94
was Rs. 60,000. The value of stock salvaged was
Rs. 13,500. The gross profit on sales was 30% and sales
amounted to Rs. 1,53,000 from January to date of fire,
while for the same period the purchases amounted to
Rs. 1,03,500. Prepare a statement of claim.
8. What is Departmental Accounts? Explain its Advantages.
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SECTION B — × 15 60 marks)
Answer any FOUR questions.
9. Arun and Balu are partners in a firm. They share profits
and losses in the ratio of 3:1. Their Balance Sheet is as
follows:
Liabilities Rs. Assets Rs.
Capital Arun 80,000 Buildings 1,00,000
Balu 40,000 Plant 25,000
Reserve 40,000 Stock 40,000
Creditors 60,000 Debtors 70,000
Bills payable 20,000 Cash 5,000
2,40,000 2,40,000
Mr. Cinu is admitted into partnership for 1/5th share of
the business on the following terms:
Buildings is revalued at Rs. 1,20,000
Plant is depreciated to 80%
Provisions for bad debts is made at
Stock is revalued at Rs. 30,000
Cinu should introduce 50% of the adjusted capital of
both Arun and Balu. Open various accounts and the
new Balance sheet after the admission of C.
10. Red, White and Blue are in partnership. The following is
their balance sheet as at 31.12.2009 on which date, they
dissolved partnership. They share profits in the ratio of
5:3:2.
Liabilities Rs. Assets Rs.
Capital Red 50,000 Premises 40,000
White 15,000 Plant 30,000
Blue 45,000 Stock 30,000
Creditors 40,000 Debtors 60,000
Red's loan 10,000
1,60,000 1,60,000
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It was agreed to repay the amount due to the partners as
and when the assets were realized, viz:
01.02.10 Rs. 30,000; 01.04.10 Rs. 73,000 and 01.06.10
Rs. 47,000 Prepare a statement showing how the
distribution to the partners should be made.
11. Explain the provisions of law regard to redemption of
redeemable preference shares.
12. Sakthi Industries Ltd. present you with the following
Trial balance as on 30th June 2013
Trial Balance
Particulars Rs. Particulars Rs.
Land Buildings 3,10,000 Share capital fully
paid)
4,00,000
(cost Rs.4,00,000) Share Premium 40,000
Plant
Machinery
3,40,000 General Reserve 1,00,000
(cost Rs.4,50,000) Profit and Loss A/c 25,000
Preliminary
Expenses
15,000 Bank loan (1.1.13 at

2,00,000
Stock (1.7.89) 65,000 Sundry creditors 35,000
Purchases 3,30,000 Sales 6,00,000
Salaries 50,000
General expenses 15,000
Director's fees 3,000
Auditor's fees 2,000
Wages 60,000
Manufacturing
Expenses
20,000
Carriage 5,000
Advertising 20,000
Sundry Debtors 60,000
Goodwill 90,000
Bank 15,000
14,00,000 14,00,000
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The company had an authorised capital of Rs. 10,00,000
divided into shares of Rs.100 each. The company had
issued 2,000 shares to vendors as fully paid.
The closing stock on 30th June 2013 was Rs. 55,000. The
M.D. is entitled to a commission of on net profits
before income tax and his commission. General expenses
include prepaid rates totalling Rs 300. A provision for
income tax to the extent of Rs. 15,000 is desired and the
directors recommended a dividend at 5%. Depreciation
should be written off on Plant and machinery at 10% and
at on Land and Building at cost.
Prepare Trading and profit and loss A/c for the year
ended 30th June 2013 Balance Sheet as at that date.
13. Kavitha Corporation Ltd was incorporated as 30th June
2010 to purchase the business of
Soman from 1.1.2010. The annual accounts prepared on
31.12.2010 disclosed that
Sales for the year was Rs. 6,00,000 of which
Rs. 2,40,000 was for the first six months.
The Gross profit for the year was Rs. 1,00,000.
Director's fees Rs. 10,000, Bad debts Rs. 3,000, and
General expenses Rs. 50,000.
Advertising (under a contract at Rs. 1,000 p.m)
Rs. 12,000.
Preliminary expenses written off Rs. 2,000 and
donation to charities given by the company
Rs. 3,000.
Prepare a statement showing Profit Prior to
Incorporation.
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14. On 1.1.2012 Balance sheet of H Ltd. was as follows:
Liabilities Rs. Assets Rs.
Share Capital: Goodwill 40,000
5,000, pref.
shares of Rs. 10
each
50,000 Patents 15,000
15,000 Equity
shares of Rs. 10
each
1,50,000
debentures 30,000 Other assets 1,64,500
Creditors 20,000 Cash 500
Pref. Dividend in
arrears for 4 years
P L A/c 28,000
Preliminary Expenses 2,000
2,50,000 2,50,000
A Scheme of reconstruction was proposed and agreed as
follows.
A new company J Ltd. with an authorised capital of
Rs. 3,25,000 all in equity shares of Rs. 10 each was
to be paid.
One equity share, Rs. 5 paid to be issued for each
equity share in the old company.
Two equity shares of Rs. 5 paid in the new company,
to be issued for every preference share in old
company.
Arrears of preference dividend to be cancelled.
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Debentures in old company to receive 3,000 equity
shares in the new company, credited as fully paid.
Creditors to be taken over by new company.
Remaining unissued shares to be taken up and paid
for in full by the directors.
The new company to take over the old companies
assets except patents subject to writing down "other
assets" by Rs. 35,000.
Patents were realized by old company for Rs. 1,000.
Open the books J Ltd. by means of journal entries
and give balance sheet of J ltd. Expenses of H Ltd.
came to Rs. 1,000.
15. Bring out and discuss the difference between Higher
Purchase System and Installment Systems.