13332...13332 -2-11111111111I11111111111111111111111 4. From the following information calculate the value of goodwill under superprofits method: 1) Average capital employed ...

11111111111I11I11111111111111111111 13332III Semester B.Com.N Examination, Nov./Dec. 2014

(Revised New Scheme)Paper - 3.3 : COMMERCECorporate Accounting - I

Time: 3 Hours Max. Marks: 80

Instruction: Answers should be written either in English or in Kannada.SECTION-A

Answer any ten of the following sub-questions. Eachquestion carries twomarks. (10x2=20)1. a) What is an underwriting?

b) What is the maximum rate of commission payable to underwriters to underwritethe shares and debentures?

c) What do you mean by preference shares?d) What entry do you pass for showing the preference capital due ? ~~~o ~~oPe) State the methods of valuation of goodwill. e;o,i;JO,i;J(:f, cv ~\!o:}lOdJ

f) How do you calculate super profit ? ~~~ ~ve.?PJ· ~g) What is capital redemption reserve account ? Do~e:> _- _ ~h) Give the meaning of valuation of shares. _---- - /i) Where do you show contingent liability in a Balance Sheet ? (do~S--

j) Under which head, do you show the following in the Balance Sheet of acompany:

i) Preliminary expenses ii) Calls in arrearsk) Mention any four divisible profits.I) Calculate capital employed from the following:

Equity share capital6% preference share capital8% debenturesReserve fundSundry creditors

Rs.1,00,0001,50,0002,00,0001,00,0002,00,000

SECTION-B

Answer any three questions of the following. Each question carries five marks. (3x5=15)2. Briefly explain the types of underwriting.3. A company has 4000, 6% redeemable preference shares of Rs. 100 each fully

paid. The company decides to redeem the shares @ a premium of 10%. Thecompany makes the following issues.2000 equity shares of Rs. 100 each at a premium of 10%. The company hassufficient profit. The redemption was duly carried out. Give journal entries recordingthe above transactions.

P.T.O.

13332 -2- 11111111111I11111111111111111111111

4. From the following information calculate the value of goodwill under superprofitsmethod:1) Average capital employed - Rs. 3,00,000.2) Net profits of the firm for the past 3 years, were Rs. 53,800, Rs. 45,350 and

RS.56,250.3) Rate of interest expected from capital having regard to the risk involved -12%.4) Fair remuneration to the partners for their services - Rs. 6,000 p.a.5) Assets of the firm 3,77,381.6) Current liabilities - Rs. 15,665.

5. The following are the particulars relating to Tarun Co.Rs.

Equity shares of Rs. 10 each 8,00,0005% debentures 2,00,000Current liabilities 2,60,000Current assets 4,00,000Fixed assets 11,00,000Goodwill 1,00,000The profits for the last 3 years were Rs. 1,03,200, Rs. 1,04,000 and Rs. 1,03,300respectively.10% is transfer to reserve and NRR is 10%. Compute the value of shares underyield method.

6. How do you treat the following items, while preparing the final accounts of a Co.a) Goods distributed as free samples.b) Calls in advance.c) Underwriting commission.d) Discount on issue of shares and debentures.e) Unclaimed dividend.

SECTION-C

Answer any three questions. Each question carries fifteen marks. (3x15=45)

7. Anu Ltd. issued 200000 equity shares of Rs. 100 each. A, B, C and D underwritersthe entire issue in the proportion of 40% : 30% : 20% : 10% respectively, forconsideration of commission in cash at 2%.

They also apply firm for shares as follows:A ~6000, B~4000, C ~4000, D~6000 shares. Besides the firmapplications from the underwriters, the public apply for 120000 shares, ofwhich marked applications are as follows:A ~20000, B~ 12000, C ~ 16000, D~ 32000 shares. Calculate the no. ofshares to be taken up by each of the underwriters and also commissionpayable to them.

11111111111I11I1111I111111111111111 -3- 13332

8. Following is the Balance Sheet of A, B, C Ltd. as on 31-3-2014.Rs. Assets

Fixed assets5,00,000 Investments

Stock2,40,000 Debtors

Cash at bank

1,00,00017,00,000 17,00,000

On 1 April 2014 the company redeemed 9% preference shares at a premium of8%. In order to pay-ott the preference share holders, the Co. sold the investmentsat Rs. 2,10,000 and also issued 2000 equity shares of Rs. 100 each, which werefully subscribed in cash. Show the journal entries and also prepare the BalanceSheet of the company after completion of transactions.

9. The following information is givena) Average capital employed Rs. 3,00,000b) Normal rate of return 10%c) Net profit for 5 years.

2009 - Rs. 28,800, 2010 - Rs. 30,800, 2011 - 34,800, 2012 - Rs. 33,800,2013 - Rs. 35,800.

The profits included non-recurring profits on an average basis of Rs. 2,000 out ofwhich it was declined that even non-recurring profits had a tendency of appearingat the rate of Rs. 1,200 p.a.

You are required to calculate Goodwill :a) As per annuity method taking the present value annuity of Re. 1 for 5 years at

10% as 3.78.b) As per 5 years purchase of super profits method.c) As per capitalization of super profits method.

10. Following is the Balance Sheet of Ranjith Ltd. as on 31-03-2013.Liabilities Rs. Assets40000 equity shares of 10 each 4,00,000 GoodwillReserve fund 1,00,000 Fixed assets

LiabilitiesShare capital5000 equity shares of Rs. 100 each3000, 8% redeemable preferenceshares of Rs. 100 each Rs. 80 paid4000, 9% redeemable preferenceshares of Rs. 100 each fully paidReserves and SurplusGeneral reserveCapital reserveSecurities premiumProfit and Loss alcCurrent LiabilitiesSundry creditors

Rs.9,00,0002,00,0001,00,0002,00,0003,00,000

4,00,000

1,00,0001,00,000

60,0002,00,000

Rs.1,00,0004,50,000

13332P&L alc8% debenturesCurrent liabilities

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1,90,00025,000

-4-35,000 Current assets

1,00,000 Preliminary expenses1,30,0007,65,000 7,65,000

For the purpose valuation of shares fixed assets are valued at Rs. 5,00,000 andgoodwill at Rs. 1,50,000 debtors included in current assets Rs. 1,00,000. Provide10% of debtors as RBD. Stock is overvalued by Rs. 9,000.The net profit for 3 years were Rs. 69,000, Rs. 71,800 and Rs. 90,200 respectively.Out of this 20% of the profit was placed to reserve. Normal return on capitalemployed is 10%.Compute the value of equity shares by net asset method and yield method andalso as certain the fair value of shares.

11. Dinesh Co. Ltd. is a company with an authorised capital Rs. 10,00,000 dividedinto 10000 equity shares of Rs. 100 each, 2500 shares were called and fully paidand give you the following ledger balances as on 31-3-2014.

Rs.Stock 1-4-2013 50,000Sales 4,25,000Purchases 3,00,000Wages 70,000Discount allowed 4,200Discount received 3,150Insurance paid (upto 30-06-2014) 6,720Salaries 18,500Rent 6,000General expenses 8,950P&L account (Cr.) 6,220Printing and stationery 2,400Advertisement 3,800Bonus 10,500Debtors 38,700Creditors 35,200Plant and machinery 80,500Furnitures 17,100Cash in bank 1,34,700Reserve 25,000Loan from M.D. 15,700Bad debts 3,200Calls in arrears 5,000You are required to prepare Trading and Profit and Loss Account, P&Lappropriation alc and the Balance Sheet for the year ended 31-3-2014.

11111111111I11111111111111111111111 -5- 13332Adjustments:1) Closing stock Rs. 91,500.2) Provide 15% depreciation on plant and 10% furniture respectively.3) Outstandinq : wages Rs. 5,200, salary Rs. 1,200 and rent Rs. 600.4) Dividend at 5% on paid up capital is to be provided.

~~~~~J~~~-~

am~Wc)ddJv 10 wcd~~K~ii ~a~. ~~ ~~ii 2 eo5K~. (10x2=20)

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J) Q2..3e)~e~r<~ 4,00,000

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7. ec:;i) ~c.J)~W' docdc:Jcxm~. 1OOd ~~zjdcm 200000 M)c:m~ c:Qecbr<~c:;i)~OV~~,~W~. A, B, C ~ 0 ~OZJ c:Qecbcz;5dc;:S;:Jt:::).)dcb~ ~~dod03 cz;5d~;:Jc:Je~ddi 11

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40%, 30%, 20%, 10%. c:QecbdeJV~cxm ~e.2 c:Sr<dJdrvcdd~ ~odJ c:Jr<CJcd~~eJV~.M Mcz;5Scz;5dc;:S;:J~ ~~dodo~d.

A ~6000, B~4000, C ~4000, D~6000 c:Qecbr<~J.cz;5Sc:Qecbr<~c:;i)05Jvd~cd~~,docdc:JiiZv~vocxmrt 120000 c:Qecbr<~iizje~~ ZJoCJd. ec;j)r<~~ rb~~d' c:Qecbr<~J~

eJ M~~od~d.A ~20000, B~ 12000, C ~ 16000, 0~ 32000 c:Qecbr<~J.~~o;irc)~cz;5dc;:S;:Jt:::).)dc:;i)~ii~~zjeuvd c:Qecbr<~~Mee~ wv~ d~c:Jcxm ec;:Seii c:Jedzjeuvrtd)~ deJVM~cm~Mee~.

11111111111I11I11111111111111111111 -7- 13332 328. 31-3-2014 dod) A, 8, C =6oc;jc:)o:be~cS ~95 ~ ee~ ~o.

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cjedJ ZJodc:JV~: Al().)Alrl~ 9,00,000CD ~100 dIv. rl~ 5000 ;w~c1s cjedJ1i~ 5,00,000 ~~51i~~ 2,00,0003000,8%, 100d~.80~~ e~ dJ ;rJd=6Jrl~~ 1,00,000 : 80=s= cjedJrl~~ 2,40,000 :ilip@1i~ 2,00,0001OOdIv. 1i~~~F ;rJoovo:bd 4000, ZJV6ou~~b~ 3,00,0009% eq~cjedJ 4,00,000;w~c1sNQ 1,00,000 :20)ZJodc:JV~NQ 1,00,000z;1S~ ~ e;))o:bo 60,000~z;1 ~~ 2rr.)~ 2,00,000

eJQNrl~~ 1,00,000 ~~~

17,00,000 17,00,000 ~ dJ1-4-2014dod) =60~No:bJ~e.9d~ e~~ cjecb1i~c;i)~e.8 ffiubc;$eiiwc;irve~;rJ~~.

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u ~ ~~.;Dzje3o:b 2000 ;w~c1s cjecbrl~~ Ne~o ~ IW~M cjedJrl~ ~rld) c;,fu()')wc:JVf1~d ./=60~No:bc;0;rJ=6d~divez;:» ov.;De3o:bc;i)ZJod), wc;irve~(Vc)~o~dd e~cS cd95o:bc;i)~ ~ M ~ ~cxmeAl.

9. N~ii ~ 5~=6odwc;$drl~c;i)Ned~f1o.~

a) ;rJ().);rJeo:b~"&>df1AldJcjZJodc:JV~dIv. 3,00,000M

b) ;w~c1s ~~~eJ dd 10%c) =6~d5 cj~Frl~ N~ ~ ~z;12009 - Rs. 28,800, 2010- Rs. 30,800, 2011 - Rs 34,800, 2012 - Rs. 33,800,2013 - Rs. 35,800.c;3)e~~~z;11i~~ c;0~().)c;$~FcScxm1id~z;1 ;rJ().);rJeo:b~c;$~F~ dIv. 2,000 ~d), ~dd~c;0~().)c;$~FcS~rld ~z;1d ZJeJ~ 2,vod) c;$~F5,dIv. 1200d~ =6~c;3)cxmf1dJ~dNe~

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l.:! :15)10. 31-3-2013dod) do~~ ~;))e3~~ e~cS ~95 ~ 5~=6od~~o.

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~ Q .T.O.7,65,000 7,65,000

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M., CJV;w~(1-4-2013) 50,000~~(J.)~ 4,25,000wDetl 3,00,0005RJ~ 70,000Ne~d ~e~ 4,200cd~d ~e~ 3,150c:J~(30-06-2014) 6,720f30~ 18,500z;rc)~ii 6,000;w~~ wmF~~ 8,950eJ()2;3-J~dwv~(Cr.) 6,220c:fu9f';)~ ;wc±>~ 2,4002ZVCoe(J.)~ 3,800d1vecdAf 10,500:xb£'@~~ 38,700QN~~ 35,200oj)~ ~ ;w,cjd 80,500clJeMecd5c!f';)rf~ 17,100cd~~ z;rc)eS0-Ccd~M 1,34,700c:JJeAJe.D 25,000~O.~.o:l)od cd~d;we) 15,7005dd:> ;We) 3,20050 z;rc)-c 5,000~ c:Jcjd~~od 5ocdNo::b~,wvd c±>~ ~2;3- cd~d ~~, ~2;3- cd~c:JNo:irve~~~ c±>~

-l -J ••..) " ~ eJ eJ ~e~c;3 c:J~oj)~ ~~D~.~OCJV£,@5~~:a) eo';c±>CJV~~~. 91 ,500.b) ~cjdd ~e~ ~~. 15d~ ~ clJeMecd5df';)d~e~ ~e. 1Od~;;1cj5~ ~iiofu~d,).c) ~~~. 5,200, ;;102,J~~. 1,200 ~ z;rc)~ii~. 600 z;rc)-c~dd) cjedJ 2,Jodwv~d c;3Je~~e. 5d~eJ()~o~ Ned:>~d,).